Correlation Between First Trust and Highland Merger
Can any of the company-specific risk be diversified away by investing in both First Trust and Highland Merger 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 Highland Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Merger and Highland Merger Arbitrage, you can compare the effects of market volatilities on First Trust and Highland Merger 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 Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Highland Merger.
Diversification Opportunities for First Trust and Highland Merger
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Highland is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Merger and Highland Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Merger Arbitrage 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 Merger are associated (or correlated) with Highland Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Merger Arbitrage has no effect on the direction of First Trust i.e., First Trust and Highland Merger go up and down completely randomly.
Pair Corralation between First Trust and Highland Merger
Assuming the 90 days horizon First Trust is expected to generate 1.67 times less return on investment than Highland Merger. But when comparing it to its historical volatility, First Trust Merger is 1.19 times less risky than Highland Merger. It trades about 0.41 of its potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest 1,928 in Highland Merger Arbitrage on October 24, 2024 and sell it today you would earn a total of 13.00 from holding Highland Merger Arbitrage or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
First Trust Merger vs. Highland Merger Arbitrage
Performance |
| Timeline |
| First Trust Merger |
| Highland Merger Arbitrage |
First Trust and Highland Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Highland Merger
The main advantage of trading using opposite First Trust and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Highland Merger 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 Highland Merger will offset losses from the drop in Highland Merger's long position.| First Trust vs. Ms Global Fixed | First Trust vs. Alliancebernstein Global Highome | First Trust vs. Qs Global Equity | First Trust vs. Barings Global Floating |
| Highland Merger vs. Old Westbury Municipal | Highland Merger vs. Georgia Tax Free Bond | Highland Merger vs. T Rowe Price | Highland Merger vs. Pace Municipal Fixed |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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