Correlation Between First Trust and OVS SpA
Can any of the company-specific risk be diversified away by investing in both First Trust and OVS SpA 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 OVS SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Active and OVS SpA, you can compare the effects of market volatilities on First Trust and OVS SpA 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 OVS SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and OVS SpA.
Diversification Opportunities for First Trust and OVS SpA
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and OVS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Active and OVS SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OVS SpA 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 Active are associated (or correlated) with OVS SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OVS SpA has no effect on the direction of First Trust i.e., First Trust and OVS SpA go up and down completely randomly.
Pair Corralation between First Trust and OVS SpA
Given the investment horizon of 90 days First Trust Active is expected to generate 0.8 times more return on investment than OVS SpA. However, First Trust Active is 1.26 times less risky than OVS SpA. It trades about -0.26 of its potential returns per unit of risk. OVS SpA is currently generating about -0.33 per unit of risk. If you would invest 3,364 in First Trust Active on October 8, 2024 and sell it today you would lose (166.00) from holding First Trust Active or give up 4.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
First Trust Active vs. OVS SpA
Performance |
Timeline |
First Trust Active |
OVS SpA |
First Trust and OVS SpA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and OVS SpA
The main advantage of trading using opposite First Trust and OVS SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, OVS SpA 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 OVS SpA will offset losses from the drop in OVS SpA's long position.First Trust vs. JPMorgan Fundamental Data | First Trust vs. Matthews China Discovery | First Trust vs. Davis Select International | First Trust vs. Dimensional ETF Trust |
OVS SpA vs. Overlay Shares Large | OVS SpA vs. Overlay Shares Foreign | OVS SpA vs. Overlay Shares Municipal | OVS SpA vs. Overlay Shares Core |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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