Correlation Between First Trust and Robo Global

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

Diversification Opportunities for First Trust and Robo Global

0.93

Correlation Coefficient

First Trust  Robo Global

Almost no diversification

The 3 months correlation between First and Robo is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and Robo Global Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robo Global Artificial 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 Robo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robo Global Artificial has no effect on the direction of First Trust i.e., First Trust and Robo Global go up and down completely randomly.

Pair Corralation between First Trust and Robo Global

Given the investment horizon of 90 days First Trust is expected to generate 2.16 times less return on investment than Robo Global. But when comparing it to its historical volatility, First Trust Nasdaq is 1.07 times less risky than Robo Global. It trades about 0.05 of its potential returns per unit of risk. Robo Global Artificial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,618  in Robo Global Artificial on September 13, 2024 and sell it today you would earn a total of  2,534  from holding Robo Global Artificial or generate 96.79% return on investment over 90 days.

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

First Trust Nasdaq  vs.  Robo Global Artificial

First Trust Nasdaq

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Nasdaq are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, First Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

Robo Global Artificial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Robo Global Artificial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Robo Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and Robo Global

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

The idea behind First Trust Nasdaq and Robo Global Artificial 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 CEOs Directory module to screen CEOs from public companies around the world.