Correlation Between First Trust and 3D Printing

Can any of the company-specific risk be diversified away by investing in both First Trust and 3D Printing 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 3D Printing 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 The 3D Printing, you can compare the effects of market volatilities on First Trust and 3D Printing 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 3D Printing. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and 3D Printing.

Diversification Opportunities for First Trust and 3D Printing

0.81

Correlation Coefficient

First Trust  3D Printing

Very poor diversification

The 3 months correlation between First and PRNT is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and The 3D Printing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3D Printing 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 3D Printing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3D Printing has no effect on the direction of First Trust i.e., First Trust and 3D Printing go up and down completely randomly.

Pair Corralation between First Trust and 3D Printing

Given the investment horizon of 90 days First Trust NASDAQ is expected to generate 1.01 times more return on investment than 3D Printing. However, First Trust is 1.01 times more volatile than The 3D Printing. It trades about 0.05 of its potential returns per unit of risk. The 3D Printing is currently generating about -0.02 per unit of risk. If you would invest  6,368  in First Trust NASDAQ on December 2, 2024 and sell it today you would earn a total of  243.00  from holding First Trust NASDAQ or generate 3.82% return on investment over 90 days.

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

First Trust NASDAQ  vs.  The 3D Printing

First Trust NASDAQ

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NASDAQ are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, First Trust is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

3D Printing

Risk-Adjusted Performance

Very Weak

Over the last 90 days The 3D Printing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, 3D Printing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First Trust and 3D Printing

The main advantage of trading using opposite First Trust and 3D Printing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, 3D Printing 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 3D Printing will offset losses from the drop in 3D Printing's long position.

The idea behind First Trust NASDAQ and The 3D Printing 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.