Correlation Between First Trust and Altagas Cum
Can any of the company-specific risk be diversified away by investing in both First Trust and Altagas Cum 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 Altagas Cum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Nasdaq and Altagas Cum Red, you can compare the effects of market volatilities on First Trust and Altagas Cum 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 Altagas Cum. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Altagas Cum.
Diversification Opportunities for First Trust and Altagas Cum
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Altagas is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and Altagas Cum Red in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altagas Cum Red 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 Nasdaq are associated (or correlated) with Altagas Cum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altagas Cum Red has no effect on the direction of First Trust i.e., First Trust and Altagas Cum go up and down completely randomly.
Pair Corralation between First Trust and Altagas Cum
Assuming the 90 days trading horizon First Trust Nasdaq is expected to generate 1.84 times more return on investment than Altagas Cum. However, First Trust is 1.84 times more volatile than Altagas Cum Red. It trades about 0.09 of its potential returns per unit of risk. Altagas Cum Red is currently generating about 0.1 per unit of risk. If you would invest 1,560 in First Trust Nasdaq on September 18, 2024 and sell it today you would earn a total of 110.00 from holding First Trust Nasdaq or generate 7.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First Trust Nasdaq vs. Altagas Cum Red
Performance |
Timeline |
First Trust Nasdaq |
Altagas Cum Red |
First Trust and Altagas Cum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and Altagas Cum
The main advantage of trading using opposite First Trust and Altagas Cum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Altagas Cum 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 Altagas Cum will offset losses from the drop in Altagas Cum's long position.First Trust vs. BMO Clean Energy | First Trust vs. Harvest Clean Energy | First Trust vs. BMO Aggregate Bond | First Trust vs. iShares Canadian HYBrid |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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