Correlation Between First Trust and CI First

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

Diversification Opportunities for First Trust and CI First

-0.44

Correlation Coefficient

First Trust  CI First

Very good diversification

The 3 months correlation between First and MXF is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and CI First Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI First Asset 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 CI First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI First Asset has no effect on the direction of First Trust i.e., First Trust and CI First go up and down completely randomly.

Pair Corralation between First Trust and CI First

Assuming the 90 days trading horizon First Trust Senior is expected to generate 0.2 times more return on investment than CI First. However, First Trust Senior is 4.96 times less risky than CI First. It trades about 0.11 of its potential returns per unit of risk. CI First Asset is currently generating about 0.02 per unit of risk. If you would invest  1,435  in First Trust Senior on September 23, 2024 and sell it today you would earn a total of  273.00  from holding First Trust Senior or generate 19.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

First Trust Senior  vs.  CI First Asset

First Trust Senior

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Senior are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI First Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI First Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with First Trust and CI First

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

The idea behind First Trust Senior and CI First 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.