Correlation Between Harbor Long and First Trust
Can any of the company-specific risk be diversified away by investing in both Harbor Long 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 Harbor Long and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbor Long Term Growers and First Trust Multi Manager, you can compare the effects of market volatilities on Harbor Long 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 Harbor Long with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Long and First Trust.
Diversification Opportunities for Harbor Long and First Trust
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Harbor and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Long Term Growers and First Trust Multi Manager in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and Harbor Long 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 Harbor Long Term Growers 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 Multi has no effect on the direction of Harbor Long i.e., Harbor Long and First Trust go up and down completely randomly.
Pair Corralation between Harbor Long and First Trust
Given the investment horizon of 90 days Harbor Long is expected to generate 2.07 times less return on investment than First Trust. But when comparing it to its historical volatility, Harbor Long Term Growers is 1.36 times less risky than First Trust. It trades about 0.14 of its potential returns per unit of risk. First Trust Multi Manager is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,068 in First Trust Multi Manager on August 24, 2024 and sell it today you would earn a total of 152.00 from holding First Trust Multi Manager or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harbor Long Term Growers vs. First Trust Multi Manager
Performance |
| Timeline |
| Harbor Long Term |
| First Trust Multi |
Harbor Long and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harbor Long and First Trust
The main advantage of trading using opposite Harbor Long and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Long 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.| Harbor Long vs. Weis Markets | Harbor Long vs. Village Super Market | Harbor Long vs. Ingles Markets Incorporated | Harbor Long vs. SpartanNash Co |
| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Active | First Trust vs. First Trust Expanded |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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