Correlation Between First Trust and CrossingBridge Pre

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

By analyzing existing cross correlation between First Trust Financials and CrossingBridge Pre Merger SPAC, you can compare the effects of market volatilities on First Trust and CrossingBridge Pre 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 CrossingBridge Pre. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and CrossingBridge Pre.

Diversification Opportunities for First Trust and CrossingBridge Pre

-0.4

Correlation Coefficient

First Trust  CrossingBridge Pre

Very good diversification

The 3 months correlation between First and CrossingBridge is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Financials and CrossingBridge Pre Merger SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrossingBridge Pre 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 Financials are associated (or correlated) with CrossingBridge Pre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CrossingBridge Pre has no effect on the direction of First Trust i.e., First Trust and CrossingBridge Pre go up and down completely randomly.

Pair Corralation between First Trust and CrossingBridge Pre

Considering the 90-day investment horizon First Trust Financials is expected to under-perform the CrossingBridge Pre. In addition to that, First Trust is 7.69 times more volatile than CrossingBridge Pre Merger SPAC. It trades about -0.03 of its total potential returns per unit of risk. CrossingBridge Pre Merger SPAC is currently generating about 0.14 per unit of volatility. If you would invest  2,067  in CrossingBridge Pre Merger SPAC on December 30, 2024 and sell it today you would earn a total of  28.00  from holding CrossingBridge Pre Merger SPAC or generate 1.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

First Trust Financials  vs.  CrossingBridge Pre Merger SPAC

First Trust Financials

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust Financials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, First Trust is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

CrossingBridge Pre

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CrossingBridge Pre Merger SPAC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CrossingBridge Pre 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 CrossingBridge Pre

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

The idea behind First Trust Financials and CrossingBridge Pre Merger SPAC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.