Correlation Between BrandywineGLOBAL and First Trust

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

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

Diversification Opportunities for BrandywineGLOBAL and First Trust

-0.05

Correlation Coefficient

BrandywineGLOBAL  First Trust

Good diversification

The 3 months correlation between BrandywineGLOBAL and First is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BrandywineGLOBAL Dynamic and First Trust International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust International and BrandywineGLOBAL 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 BrandywineGLOBAL Dynamic 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 International has no effect on the direction of BrandywineGLOBAL i.e., BrandywineGLOBAL and First Trust go up and down completely randomly.

Pair Corralation between BrandywineGLOBAL and First Trust

Given the investment horizon of 90 days BrandywineGLOBAL Dynamic is expected to under-perform the First Trust. In addition to that, BrandywineGLOBAL is 1.19 times more volatile than First Trust International. It trades about 0.0 of its total potential returns per unit of risk. First Trust International is currently generating about 0.19 per unit of volatility. If you would invest  3,390  in First Trust International on December 29, 2024 and sell it today you would earn a total of  307.00  from holding First Trust International or generate 9.06% return on investment over 90 days.

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

BrandywineGLOBAL Dynamic  vs.  First Trust International

BrandywineGLOBAL D

Risk-Adjusted Performance

Very Weak

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

First Trust International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BrandywineGLOBAL and First Trust

The main advantage of trading using opposite BrandywineGLOBAL and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BrandywineGLOBAL 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 BrandywineGLOBAL Dynamic and First Trust International 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.