Correlation Between First Asset and Global Dividend
Can any of the company-specific risk be diversified away by investing in both First Asset and Global 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 Asset and Global Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Asset Tech and Global Dividend Growth, you can compare the effects of market volatilities on First Asset and Global 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 Asset with a short position of Global Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Global Dividend.
Diversification Opportunities for First Asset and Global Dividend
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Global is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Tech and Global Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dividend Growth and First Asset 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 Asset Tech are associated (or correlated) with Global Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dividend Growth has no effect on the direction of First Asset i.e., First Asset and Global Dividend go up and down completely randomly.
Pair Corralation between First Asset and Global Dividend
Assuming the 90 days trading horizon First Asset Tech is expected to under-perform the Global Dividend. But the etf apears to be less risky and, when comparing its historical volatility, First Asset Tech is 1.16 times less risky than Global Dividend. The etf trades about -0.05 of its potential returns per unit of risk. The Global Dividend Growth is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,130 in Global Dividend Growth on August 30, 2024 and sell it today you would earn a total of 80.00 from holding Global Dividend Growth or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Asset Tech vs. Global Dividend Growth
Performance |
| Timeline |
| First Asset Tech |
| Global Dividend Growth |
First Asset and Global Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Asset and Global Dividend
The main advantage of trading using opposite First Asset and Global Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset position performs unexpectedly, Global 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 Global Dividend will offset losses from the drop in Global Dividend's long position.| First Asset vs. BMO Covered Call | First Asset vs. BMO Canadian High | First Asset vs. BMO Europe High | First Asset vs. Harvest Healthcare Leaders |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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