Correlation Between First Trust and Pioneer High

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

Diversification Opportunities for First Trust and Pioneer High

0.65

Correlation Coefficient

First Trust  Pioneer High

Poor diversification

The 3 months correlation between First and Pioneer is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Pioneer High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer High Income 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 Pioneer High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer High Income has no effect on the direction of First Trust i.e., First Trust and Pioneer High go up and down completely randomly.

Pair Corralation between First Trust and Pioneer High

Considering the 90-day investment horizon First Trust Senior is expected to under-perform the Pioneer High. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Senior is 1.01 times less risky than Pioneer High. The etf trades about -0.01 of its potential returns per unit of risk. The Pioneer High Income is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  760.00  in Pioneer High Income on December 27, 2024 and sell it today you would earn a total of  12.00  from holding Pioneer High Income or generate 1.58% 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.  Pioneer High Income

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.

Pioneer High Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer High Income are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Pioneer High is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First Trust and Pioneer High

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

The idea behind First Trust Senior and Pioneer High Income 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.