Correlation Between First Trust and US Global

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

Diversification Opportunities for First Trust and US Global

0.0

Correlation Coefficient

First Trust  US Global

Pay attention - limited upside

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

Pair Corralation between First Trust and US Global

Given the investment horizon of 90 days First Trust NASDAQ is expected to under-perform the US Global. In addition to that, First Trust is 1.38 times more volatile than US Global Jets. It trades about -0.01 of its total potential returns per unit of risk. US Global Jets is currently generating about 0.06 per unit of volatility. If you would invest  1,786  in US Global Jets on September 25, 2024 and sell it today you would earn a total of  795.00  from holding US Global Jets or generate 44.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Trust NASDAQ  vs.  US Global Jets

First Trust NASDAQ

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NASDAQ are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, First Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

US Global Jets

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Jets are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, US Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and US Global

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

The idea behind First Trust NASDAQ and US Global Jets 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 Commodity Directory module to find actively traded commodities issued by global exchanges.