Correlation Between B2Gold Corp and First Trust

Can any of the company-specific risk be diversified away by investing in both B2Gold Corp 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 B2Gold Corp and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between B2Gold Corp and First Trust Exchange Traded, you can compare the effects of market volatilities on B2Gold Corp 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 B2Gold Corp with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of B2Gold Corp and First Trust.

Diversification Opportunities for B2Gold Corp and First Trust

-0.54

Correlation Coefficient

B2Gold Corp  First Trust

Excellent diversification

The 3 months correlation between B2Gold and First is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding B2Gold Corp and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and B2Gold Corp 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 B2Gold Corp 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 Exchange has no effect on the direction of B2Gold Corp i.e., B2Gold Corp and First Trust go up and down completely randomly.

Pair Corralation between B2Gold Corp and First Trust

Considering the 90-day investment horizon B2Gold Corp is expected to under-perform the First Trust. In addition to that, B2Gold Corp is 17.99 times more volatile than First Trust Exchange Traded. It trades about -0.15 of its total potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.1 per unit of volatility. If you would invest  1,996  in First Trust Exchange Traded on September 16, 2024 and sell it today you would earn a total of  17.00  from holding First Trust Exchange Traded or generate 0.85% return on investment over 90 days.

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

B2Gold Corp  vs.  First Trust Exchange Traded

B2Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B2Gold Corp 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 nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

First Trust Exchange

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, First Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with B2Gold Corp and First Trust

The main advantage of trading using opposite B2Gold Corp and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B2Gold Corp 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 B2Gold Corp and First Trust Exchange Traded 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.