Correlation Between Vivaldi Merger and First Trustconfluence

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

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

Diversification Opportunities for Vivaldi Merger and First Trustconfluence

-0.2

Correlation Coefficient

Vivaldi Merger  First Trustconfluence

Good diversification

The 3 months correlation between Vivaldi and First is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vivaldi Merger Arbitrage and First Trustconfluence Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trustconfluence and Vivaldi Merger 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 Vivaldi Merger Arbitrage are associated (or correlated) with First Trustconfluence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trustconfluence has no effect on the direction of Vivaldi Merger i.e., Vivaldi Merger and First Trustconfluence go up and down completely randomly.

Pair Corralation between Vivaldi Merger and First Trustconfluence

Assuming the 90 days horizon Vivaldi Merger Arbitrage is expected to under-perform the First Trustconfluence. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vivaldi Merger Arbitrage is 1.36 times less risky than First Trustconfluence. The mutual fund trades about -0.11 of its potential returns per unit of risk. The First Trustconfluence Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,178  in First Trustconfluence Small on September 13, 2024 and sell it today you would earn a total of  123.00  from holding First Trustconfluence Small or generate 3.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Vivaldi Merger Arbitrage  vs.  First Trustconfluence Small

Vivaldi Merger Arbitrage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivaldi Merger Arbitrage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Vivaldi Merger is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Trustconfluence

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trustconfluence Small are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, First Trustconfluence is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vivaldi Merger and First Trustconfluence

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

The idea behind Vivaldi Merger Arbitrage and First Trustconfluence Small 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.