Correlation Between Pinnacle Focused and First Trust

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

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

Diversification Opportunities for Pinnacle Focused and First Trust

0.47

Correlation Coefficient

Pinnacle Focused  First Trust

Very weak diversification

The 3 months correlation between Pinnacle and First is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Focused Opportunities and First Trust Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and Pinnacle Focused 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 Pinnacle Focused Opportunities 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 Multi has no effect on the direction of Pinnacle Focused i.e., Pinnacle Focused and First Trust go up and down completely randomly.

Pair Corralation between Pinnacle Focused and First Trust

Given the investment horizon of 90 days Pinnacle Focused Opportunities is expected to under-perform the First Trust. In addition to that, Pinnacle Focused is 4.7 times more volatile than First Trust Multi Asset. It trades about -0.08 of its total potential returns per unit of risk. First Trust Multi Asset is currently generating about 0.0 per unit of volatility. If you would invest  1,662  in First Trust Multi Asset on December 1, 2024 and sell it today you would lose (3.00) from holding First Trust Multi Asset or give up 0.18% of portfolio value over 90 days.

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

Pinnacle Focused Opportunities  vs.  First Trust Multi Asset

Pinnacle Focused Opp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinnacle Focused Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

First Trust Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust Multi Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, First Trust is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pinnacle Focused and First Trust

The main advantage of trading using opposite Pinnacle Focused and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle Focused 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 Pinnacle Focused Opportunities and First Trust Multi Asset 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.