Correlation Between Perella Weinberg and First Trust
Can any of the company-specific risk be diversified away by investing in both Perella Weinberg and First Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Perella Weinberg and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perella Weinberg Partners and First Trust NASDAQ 100, you can compare the effects of market volatilities on Perella Weinberg and First Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Perella Weinberg with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perella Weinberg and First Trust.
Diversification Opportunities for Perella Weinberg and First Trust
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Perella and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Perella Weinberg Partners and First Trust NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NASDAQ and Perella Weinberg is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Perella Weinberg Partners are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust NASDAQ has no effect on the direction of Perella Weinberg i.e., Perella Weinberg and First Trust go up and down completely randomly.
Pair Corralation between Perella Weinberg and First Trust
Considering the 90-day investment horizon Perella Weinberg Partners is expected to generate 5.72 times more return on investment than First Trust. However, Perella Weinberg is 5.72 times more volatile than First Trust NASDAQ 100. It trades about 0.28 of its potential returns per unit of risk. First Trust NASDAQ 100 is currently generating about 0.36 per unit of risk. If you would invest 2,023 in Perella Weinberg Partners on September 1, 2024 and sell it today you would earn a total of 544.00 from holding Perella Weinberg Partners or generate 26.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Perella Weinberg Partners vs. First Trust NASDAQ 100
Performance |
| Timeline |
| Perella Weinberg Partners |
| First Trust NASDAQ |
Perella Weinberg and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perella Weinberg and First Trust
The main advantage of trading using opposite Perella Weinberg and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perella Weinberg position performs unexpectedly, First Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Trust will offset losses from the drop in First Trust's long position.| Perella Weinberg vs. Evercore Partners | Perella Weinberg vs. Lazard | Perella Weinberg vs. Piper Sandler Companies | Perella Weinberg vs. Moelis Co |
| First Trust vs. First Trust NASDAQ 100 | First Trust vs. First Trust Multi | First Trust vs. First Trust Large | First Trust vs. First Trust Large |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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