Correlation Between AGFiQ Market and First Trust

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

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

Diversification Opportunities for AGFiQ Market and First Trust

-0.91

Correlation Coefficient

AGFiQ Market  First Trust

Pay attention - limited upside

The 3 months correlation between AGFiQ and First is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding AGFiQ Market Neutral and First Trust LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust LongShort and AGFiQ Market 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 AGFiQ Market Neutral 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 LongShort has no effect on the direction of AGFiQ Market i.e., AGFiQ Market and First Trust go up and down completely randomly.

Pair Corralation between AGFiQ Market and First Trust

Given the investment horizon of 90 days AGFiQ Market Neutral is expected to under-perform the First Trust. In addition to that, AGFiQ Market is 2.2 times more volatile than First Trust LongShort. It trades about -0.25 of its total potential returns per unit of risk. First Trust LongShort is currently generating about 0.42 per unit of volatility. If you would invest  6,537  in First Trust LongShort on September 19, 2024 and sell it today you would earn a total of  232.00  from holding First Trust LongShort or generate 3.55% return on investment over 90 days.

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

AGFiQ Market Neutral  vs.  First Trust LongShort

AGFiQ Market Neutral

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGFiQ Market Neutral has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, AGFiQ Market is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

First Trust LongShort

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust LongShort are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AGFiQ Market and First Trust

The main advantage of trading using opposite AGFiQ Market and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGFiQ Market 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 AGFiQ Market Neutral and First Trust LongShort 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 Anywhere module to track or share privately all of your investments from the convenience of any device.