Correlation Between Teucrium Soybean and First Trust
Can any of the company-specific risk be diversified away by investing in both Teucrium Soybean 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 Teucrium Soybean and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teucrium Soybean and First Trust Institutional, you can compare the effects of market volatilities on Teucrium Soybean 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 Teucrium Soybean with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teucrium Soybean and First Trust.
Diversification Opportunities for Teucrium Soybean and First Trust
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teucrium and First is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Teucrium Soybean and First Trust Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Institutional and Teucrium Soybean 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 Teucrium Soybean 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 Institutional has no effect on the direction of Teucrium Soybean i.e., Teucrium Soybean and First Trust go up and down completely randomly.
Pair Corralation between Teucrium Soybean and First Trust
Given the investment horizon of 90 days Teucrium Soybean is expected to under-perform the First Trust. In addition to that, Teucrium Soybean is 2.31 times more volatile than First Trust Institutional. It trades about -0.04 of its total potential returns per unit of risk. First Trust Institutional is currently generating about 0.06 per unit of volatility. If you would invest 1,663 in First Trust Institutional on October 21, 2024 and sell it today you would earn a total of 210.00 from holding First Trust Institutional or generate 12.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teucrium Soybean vs. First Trust Institutional
Performance |
| Timeline |
| Teucrium Soybean |
| First Trust Institutional |
Teucrium Soybean and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teucrium Soybean and First Trust
The main advantage of trading using opposite Teucrium Soybean and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teucrium Soybean 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.| Teucrium Soybean vs. Teucrium Corn | Teucrium Soybean vs. Teucrium Wheat | Teucrium Soybean vs. Teucrium Sugar |
| First Trust vs. First Trust Preferred | First Trust vs. First Trust Senior | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |