Correlation Between First Trust and Blackrock Debt

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

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

Diversification Opportunities for First Trust and Blackrock Debt

0.67

Correlation Coefficient

First Trust  Blackrock Debt

Poor diversification

The 3 months correlation between First and Blackrock is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Blackrock Debt Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Debt Strategies 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 Senior are associated (or correlated) with Blackrock Debt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Debt Strategies has no effect on the direction of First Trust i.e., First Trust and Blackrock Debt go up and down completely randomly.

Pair Corralation between First Trust and Blackrock Debt

Considering the 90-day investment horizon First Trust Senior is expected to under-perform the Blackrock Debt. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Senior is 1.01 times less risky than Blackrock Debt. The etf trades about 0.0 of its potential returns per unit of risk. The Blackrock Debt Strategies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,047  in Blackrock Debt Strategies on December 28, 2024 and sell it today you would earn a total of  5.00  from holding Blackrock Debt Strategies or generate 0.48% return on investment over 90 days.

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

First Trust Senior  vs.  Blackrock Debt Strategies

First Trust Senior

Risk-Adjusted Performance

Very Weak

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

Blackrock Debt Strategies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Debt Strategies are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Blackrock Debt 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 Blackrock Debt

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

The idea behind First Trust Senior and Blackrock Debt Strategies 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 Global Correlations module to find global opportunities by holding instruments from different markets.