Correlation Between First Trust and Tortoise Energy

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

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

Diversification Opportunities for First Trust and Tortoise Energy

0.69

Correlation Coefficient

First Trust  Tortoise Energy

Poor diversification

The 3 months correlation between First and Tortoise is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mlp and Tortoise Energy Independence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tortoise Energy Inde 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 Mlp are associated (or correlated) with Tortoise Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tortoise Energy Inde has no effect on the direction of First Trust i.e., First Trust and Tortoise Energy go up and down completely randomly.

Pair Corralation between First Trust and Tortoise Energy

If you would invest  3,714  in Tortoise Energy Independence on September 5, 2024 and sell it today you would earn a total of  636.00  from holding Tortoise Energy Independence or generate 17.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

First Trust Mlp  vs.  Tortoise Energy Independence

First Trust Mlp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Mlp has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong technical and fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Tortoise Energy Inde

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Energy Independence are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively fragile fundamental indicators, Tortoise Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and Tortoise Energy

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

The idea behind First Trust Mlp and Tortoise Energy Independence 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.