Correlation Between First Trust and ClearBridge Dividend
Can any of the company-specific risk be diversified away by investing in both First Trust and ClearBridge Dividend 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 First Trust and ClearBridge Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust RiverFront and ClearBridge Dividend Strategy, you can compare the effects of market volatilities on First Trust and ClearBridge Dividend 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 First Trust with a short position of ClearBridge Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ClearBridge Dividend.
Diversification Opportunities for First Trust and ClearBridge Dividend
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and ClearBridge is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding First Trust RiverFront and ClearBridge Dividend Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearBridge Dividend and First Trust 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 First Trust RiverFront are associated (or correlated) with ClearBridge Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearBridge Dividend has no effect on the direction of First Trust i.e., First Trust and ClearBridge Dividend go up and down completely randomly.
Pair Corralation between First Trust and ClearBridge Dividend
Given the investment horizon of 90 days First Trust RiverFront is expected to under-perform the ClearBridge Dividend. In addition to that, First Trust is 1.2 times more volatile than ClearBridge Dividend Strategy. It trades about -0.05 of its total potential returns per unit of risk. ClearBridge Dividend Strategy is currently generating about 0.37 per unit of volatility. If you would invest 5,054 in ClearBridge Dividend Strategy on September 1, 2024 and sell it today you would earn a total of 291.00 from holding ClearBridge Dividend Strategy or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Trust RiverFront vs. ClearBridge Dividend Strategy
Performance |
| Timeline |
| First Trust RiverFront |
| ClearBridge Dividend |
First Trust and ClearBridge Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ClearBridge Dividend
The main advantage of trading using opposite First Trust and ClearBridge Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ClearBridge Dividend 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 ClearBridge Dividend will offset losses from the drop in ClearBridge Dividend's long position.| First Trust vs. First Trust RiverFront | First Trust vs. First Trust RiverFront | First Trust vs. First Trust Emerging | First Trust vs. First Trust Emerging |
| ClearBridge Dividend vs. ClearBridge Large Cap | ClearBridge Dividend vs. VictoryShares Dividend Accelerator | ClearBridge Dividend vs. VictoryShares Multi Factor Minimum |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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