Correlation Between Armada Hflr and First Trust

Can any of the company-specific risk be diversified away by investing in both Armada Hflr 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 Armada Hflr and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and First Trust Latin, you can compare the effects of market volatilities on Armada Hflr 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 Armada Hflr with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and First Trust.

Diversification Opportunities for Armada Hflr and First Trust

-0.61

Correlation Coefficient

Armada Hflr  First Trust

Excellent diversification

The 3 months correlation between Armada and First is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and First Trust Latin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Latin and Armada Hflr 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 Armada Hflr Pr 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 Latin has no effect on the direction of Armada Hflr i.e., Armada Hflr and First Trust go up and down completely randomly.

Pair Corralation between Armada Hflr and First Trust

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the First Trust. In addition to that, Armada Hflr is 1.69 times more volatile than First Trust Latin. It trades about -0.2 of its total potential returns per unit of risk. First Trust Latin is currently generating about 0.2 per unit of volatility. If you would invest  1,537  in First Trust Latin on December 27, 2024 and sell it today you would earn a total of  231.00  from holding First Trust Latin or generate 15.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Armada Hflr Pr  vs.  First Trust Latin

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

First Trust Latin

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Latin are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, First Trust displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and First Trust

The main advantage of trading using opposite Armada Hflr and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr 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 Armada Hflr Pr and First Trust Latin 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.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.