Correlation Between First Trust and Blackrock

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

Diversification Opportunities for First Trust and Blackrock

0.0

Correlation Coefficient

First Trust  Blackrock

Pay attention - limited upside

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

Pair Corralation between First Trust and Blackrock

If you would invest (100.00) in Blackrock on December 20, 2024 and sell it today you would earn a total of  100.00  from holding Blackrock 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 Nasdaq  vs.  Blackrock

First Trust Nasdaq

Risk-Adjusted Performance

Very Weak

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

Blackrock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Blackrock is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First Trust and Blackrock

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

The idea behind First Trust Nasdaq and Blackrock 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.