Correlation Between Subversive Capital and First Trust

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

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

Diversification Opportunities for Subversive Capital and First Trust

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Correlation Coefficient

Subversive Capital  First Trust

Pay attention - limited upside

The 3 months correlation between Subversive and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Subversive Capital Advisor and First Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust and Subversive Capital 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 Subversive Capital Advisor 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 has no effect on the direction of Subversive Capital i.e., Subversive Capital and First Trust go up and down completely randomly.

Pair Corralation between Subversive Capital and First Trust

Given the investment horizon of 90 days Subversive Capital Advisor is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, Subversive Capital Advisor is 1.26 times less risky than First Trust. The etf trades about -0.02 of its potential returns per unit of risk. The First Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,614  in First Trust on October 26, 2024 and sell it today you would earn a total of  179.00  from holding First Trust or generate 6.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	72.41%
Values	Daily Returns

Subversive Capital Advisor  vs.  First Trust

Subversive Capital

Risk-Adjusted Performance

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Very Weak

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

First Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Subversive Capital and First Trust

The main advantage of trading using opposite Subversive Capital and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Subversive Capital 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 Subversive Capital Advisor and First Trust 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.