Correlation Between First Trust and Martin Currie

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

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

Diversification Opportunities for First Trust and Martin Currie

0.07

Correlation Coefficient

First Trust  Martin Currie

Significant diversification

The 3 months correlation between First and Martin is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Growth and Martin Currie Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Currie Sustainable 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 Growth are associated (or correlated) with Martin Currie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Currie Sustainable has no effect on the direction of First Trust i.e., First Trust and Martin Currie go up and down completely randomly.

Pair Corralation between First Trust and Martin Currie

Given the investment horizon of 90 days First Trust Growth is expected to under-perform the Martin Currie. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Growth is 1.13 times less risky than Martin Currie. The etf trades about -0.06 of its potential returns per unit of risk. The Martin Currie Sustainable is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,315  in Martin Currie Sustainable on December 28, 2024 and sell it today you would earn a total of  32.00  from holding Martin Currie Sustainable or generate 2.43% return on investment over 90 days.

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

First Trust Growth  vs.  Martin Currie Sustainable

First Trust Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and 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.

Martin Currie Sustainable

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Currie Sustainable are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Martin Currie is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First Trust and Martin Currie

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

The idea behind First Trust Growth and Martin Currie Sustainable 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.