Correlation Between First Trust and Starboard Investment
Can any of the company-specific risk be diversified away by investing in both First Trust and Starboard Investment 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 Starboard Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dorsey and Starboard Investment Trust, you can compare the effects of market volatilities on First Trust and Starboard Investment 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 Starboard Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Starboard Investment.
Diversification Opportunities for First Trust and Starboard Investment
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Starboard is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and Starboard Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starboard Investment 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 Dorsey are associated (or correlated) with Starboard Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starboard Investment has no effect on the direction of First Trust i.e., First Trust and Starboard Investment go up and down completely randomly.
Pair Corralation between First Trust and Starboard Investment
Given the investment horizon of 90 days First Trust Dorsey is expected to under-perform the Starboard Investment. In addition to that, First Trust is 1.14 times more volatile than Starboard Investment Trust. It trades about -0.27 of its total potential returns per unit of risk. Starboard Investment Trust is currently generating about -0.18 per unit of volatility. If you would invest 1,659 in Starboard Investment Trust on December 3, 2024 and sell it today you would lose (58.00) from holding Starboard Investment Trust or give up 3.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
First Trust Dorsey vs. Starboard Investment Trust
Performance |
Timeline |
First Trust Dorsey |
Starboard Investment |
First Trust and Starboard Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and Starboard Investment
The main advantage of trading using opposite First Trust and Starboard Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Starboard Investment 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 Starboard Investment will offset losses from the drop in Starboard Investment's long position.First Trust vs. Strategy Shares | First Trust vs. Freedom Day Dividend | First Trust vs. Franklin Templeton ETF | First Trust vs. iShares MSCI China |
Check out your portfolio center.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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