Correlation Between TSJA and First Trust
Can any of the company-specific risk be diversified away by investing in both TSJA 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 TSJA and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TSJA and First Trust Emerging, you can compare the effects of market volatilities on TSJA 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 TSJA with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of TSJA and First Trust.
Diversification Opportunities for TSJA and First Trust
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TSJA and First is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding TSJA and First Trust Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Emerging and TSJA 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 TSJA 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 Emerging has no effect on the direction of TSJA i.e., TSJA and First Trust go up and down completely randomly.
Pair Corralation between TSJA and First Trust
Given the investment horizon of 90 days TSJA is expected to generate 1.08 times more return on investment than First Trust. However, TSJA is 1.08 times more volatile than First Trust Emerging. It trades about 0.12 of its potential returns per unit of risk. First Trust Emerging is currently generating about 0.04 per unit of risk. If you would invest 2,436 in TSJA on August 28, 2024 and sell it today you would earn a total of 337.00 from holding TSJA or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.72% |
| Values | Daily Returns |
TSJA vs. First Trust Emerging
Performance |
| Timeline |
| TSJA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Emerging |
TSJA and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TSJA and First Trust
The main advantage of trading using opposite TSJA and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TSJA 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.The idea behind TSJA and First Trust Emerging pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| First Trust vs. First Trust SSI | First Trust vs. First Trust BuyWrite | First Trust vs. First Trust Managed | First Trust vs. First Trust Tactical |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |