Correlation Between RENW and First Trust

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

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

Diversification Opportunities for RENW and First Trust

0.0

Correlation Coefficient

RENW  First Trust

Pay attention - limited upside

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

Pair Corralation between RENW and First Trust

If you would invest  2,850  in First Trust EIP on December 19, 2024 and sell it today you would earn a total of  201.00  from holding First Trust EIP or generate 7.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

RENW  vs.  First Trust EIP

RENW

Risk-Adjusted Performance

Very Weak

Over the last 90 days RENW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, RENW is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First Trust EIP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust EIP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with RENW and First Trust

The main advantage of trading using opposite RENW and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RENW 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 RENW and First Trust EIP 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.