Correlation Between Aquagold International and First Trust

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

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

Diversification Opportunities for Aquagold International and First Trust

-0.55

Correlation Coefficient

Aquagold International  First Trust

Excellent diversification

The 3 months correlation between Aquagold and First is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and First Trust Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Specialty and Aquagold International 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 Aquagold International 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 Specialty has no effect on the direction of Aquagold International i.e., Aquagold International and First Trust go up and down completely randomly.

Pair Corralation between Aquagold International and First Trust

Given the investment horizon of 90 days Aquagold International is expected to under-perform the First Trust. In addition to that, Aquagold International is 9.28 times more volatile than First Trust Specialty. It trades about -0.21 of its total potential returns per unit of risk. First Trust Specialty is currently generating about 0.12 per unit of volatility. If you would invest  430.00  in First Trust Specialty on November 28, 2024 and sell it today you would earn a total of  12.00  from holding First Trust Specialty or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Aquagold International  vs.  First Trust Specialty

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International 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 basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

First Trust Specialty

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Specialty are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, First Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and First Trust

The main advantage of trading using opposite Aquagold International and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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 Aquagold International and First Trust Specialty 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.