Correlation Between First Trust and AGFiQ Market

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Can any of the company-specific risk be diversified away by investing in both First Trust and AGFiQ Market 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 AGFiQ Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust LongShort and AGFiQ Market Neutral, you can compare the effects of market volatilities on First Trust and AGFiQ Market 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 AGFiQ Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and AGFiQ Market.

Diversification Opportunities for First Trust and AGFiQ Market

-0.91
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between First and AGFiQ is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Trust LongShort and AGFiQ Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGFiQ Market Neutral 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 LongShort are associated (or correlated) with AGFiQ Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGFiQ Market Neutral has no effect on the direction of First Trust i.e., First Trust and AGFiQ Market go up and down completely randomly.

Pair Corralation between First Trust and AGFiQ Market

Given the investment horizon of 90 days First Trust LongShort is expected to generate 0.6 times more return on investment than AGFiQ Market. However, First Trust LongShort is 1.68 times less risky than AGFiQ Market. It trades about 0.11 of its potential returns per unit of risk. AGFiQ Market Neutral is currently generating about 0.0 per unit of risk. If you would invest  4,757  in First Trust LongShort on September 20, 2024 and sell it today you would earn a total of  1,838  from holding First Trust LongShort or generate 38.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

First Trust LongShort  vs.  AGFiQ Market Neutral

 Performance 
       Timeline  
First Trust LongShort 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in First Trust LongShort are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, First Trust is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
AGFiQ Market Neutral 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AGFiQ Market Neutral has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, AGFiQ Market is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

First Trust and AGFiQ Market Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Trust and AGFiQ Market

The main advantage of trading using opposite First Trust and AGFiQ Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, AGFiQ Market 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 AGFiQ Market will offset losses from the drop in AGFiQ Market's long position.
The idea behind First Trust LongShort and AGFiQ Market Neutral 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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