Correlation Between First Trust and FFHG

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

Diversification Opportunities for First Trust and FFHG

0.0

Correlation Coefficient

First Trust  FFHG

Pay attention - limited upside

The 3 months correlation between First and FFHG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Trust LongShort and FFHG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFHG 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 FFHG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFHG has no effect on the direction of First Trust i.e., First Trust and FFHG go up and down completely randomly.

Pair Corralation between First Trust and FFHG

If you would invest (100.00) in FFHG on December 26, 2024 and sell it today you would earn a total of  100.00  from holding FFHG or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

First Trust LongShort  vs.  FFHG

First Trust LongShort

Risk-Adjusted Performance

Very Weak

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

FFHG

Risk-Adjusted Performance

Very Weak

Over the last 90 days FFHG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, FFHG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Trust and FFHG

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

The idea behind First Trust LongShort and FFHG 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.