Correlation Between First Trust and 443510AK8

Can any of the company-specific risk be diversified away by investing in both First Trust and 443510AK8 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 443510AK8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Trust Exchange Traded and HUBB 23 15 MAR 31, you can compare the effects of market volatilities on First Trust and 443510AK8 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 443510AK8. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and 443510AK8.

Diversification Opportunities for First Trust and 443510AK8

-0.64

Correlation Coefficient

First Trust  443510AK8

Excellent diversification

The 3 months correlation between First and 443510AK8 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and HUBB 23 15 MAR 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUBB 23 15 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 Exchange Traded are associated (or correlated) with 443510AK8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUBB 23 15 has no effect on the direction of First Trust i.e., First Trust and 443510AK8 go up and down completely randomly.

Pair Corralation between First Trust and 443510AK8

Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.65 times more return on investment than 443510AK8. However, First Trust Exchange Traded is 1.54 times less risky than 443510AK8. It trades about 0.11 of its potential returns per unit of risk. HUBB 23 15 MAR 31 is currently generating about -0.14 per unit of risk. If you would invest  2,778  in First Trust Exchange Traded on September 24, 2024 and sell it today you would earn a total of  42.00  from holding First Trust Exchange Traded or generate 1.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	70.0%
Values	Daily Returns

First Trust Exchange Traded  vs.  HUBB 23 15 MAR 31

First Trust Exchange

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

HUBB 23 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUBB 23 15 MAR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUBB 23 15 MAR 31 investors.

Pair Trading with First Trust and 443510AK8

The main advantage of trading using opposite First Trust and 443510AK8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, 443510AK8 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 443510AK8 will offset losses from the drop in 443510AK8's long position.

The idea behind First Trust Exchange Traded and HUBB 23 15 MAR 31 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.