Correlation Between Global Blockchain and First Trust

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

By analyzing existing cross correlation between Global Blockchain Acquisition and First Trust Lunt, you can compare the effects of market volatilities on Global Blockchain and First Trust 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 Global Blockchain with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Blockchain and First Trust.

Diversification Opportunities for Global Blockchain and First Trust

0.56

Correlation Coefficient

Global Blockchain  First Trust

Very weak diversification

The 3 months correlation between Global and First is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Global Blockchain Acquisition and First Trust Lunt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Lunt and Global Blockchain 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 Global Blockchain Acquisition are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Lunt has no effect on the direction of Global Blockchain i.e., Global Blockchain and First Trust go up and down completely randomly.

Pair Corralation between Global Blockchain and First Trust

Given the investment horizon of 90 days Global Blockchain Acquisition is expected to under-perform the First Trust. But the stock apears to be less risky and, when comparing its historical volatility, Global Blockchain Acquisition is 1.99 times less risky than First Trust. The stock trades about 0.0 of its potential returns per unit of risk. The First Trust Lunt is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,211  in First Trust Lunt on September 19, 2024 and sell it today you would earn a total of  154.00  from holding First Trust Lunt or generate 4.8% return on investment over 90 days.

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

Global Blockchain Acquisition  vs.  First Trust Lunt

Global Blockchain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Blockchain Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Global Blockchain is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

First Trust Lunt

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Lunt are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Blockchain and First Trust

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

The idea behind Global Blockchain Acquisition and First Trust Lunt 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.