Correlation Between First Trust and Unusual Whales

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

By analyzing existing cross correlation between First Trust NASDAQ and Unusual Whales Subversive, you can compare the effects of market volatilities on First Trust and Unusual Whales 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 Unusual Whales. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Unusual Whales.

Diversification Opportunities for First Trust and Unusual Whales

0.89

Correlation Coefficient

First Trust  Unusual Whales

Very poor diversification

The 3 months correlation between First and Unusual is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and Unusual Whales Subversive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unusual Whales Subversive 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 NASDAQ are associated (or correlated) with Unusual Whales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unusual Whales Subversive has no effect on the direction of First Trust i.e., First Trust and Unusual Whales go up and down completely randomly.

Pair Corralation between First Trust and Unusual Whales

Given the investment horizon of 90 days First Trust NASDAQ is expected to generate 1.26 times more return on investment than Unusual Whales. However, First Trust is 1.26 times more volatile than Unusual Whales Subversive. It trades about 0.1 of its potential returns per unit of risk. Unusual Whales Subversive is currently generating about 0.1 per unit of risk. If you would invest  3,703  in First Trust NASDAQ on September 26, 2024 and sell it today you would earn a total of  2,802  from holding First Trust NASDAQ or generate 75.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.56%
Values	Daily Returns

First Trust NASDAQ  vs.  Unusual Whales Subversive

First Trust NASDAQ

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NASDAQ are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental drivers, First Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Unusual Whales Subversive

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unusual Whales Subversive are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Unusual Whales is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First Trust and Unusual Whales

The main advantage of trading using opposite First Trust and Unusual Whales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Unusual Whales 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 Unusual Whales will offset losses from the drop in Unusual Whales' long position.

The idea behind First Trust NASDAQ and Unusual Whales Subversive 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.