Correlation Between First Trust and Kelly Strategic

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

Diversification Opportunities for First Trust and Kelly Strategic

0.36

Correlation Coefficient

First Trust  Kelly Strategic

Weak diversification

The 3 months correlation between First and Kelly is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and Kelly Strategic Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelly Strategic Mana 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 Kelly Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelly Strategic Mana has no effect on the direction of First Trust i.e., First Trust and Kelly Strategic go up and down completely randomly.

Pair Corralation between First Trust and Kelly Strategic

If you would invest  1,703  in First Trust Nasdaq on September 29, 2024 and sell it today you would earn a total of  30.00  from holding First Trust Nasdaq or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

First Trust Nasdaq  vs.  Kelly Strategic Management

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. Despite nearly stable forward-looking signals, First Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Kelly Strategic Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kelly Strategic Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kelly Strategic is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with First Trust and Kelly Strategic

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

The idea behind First Trust Nasdaq and Kelly Strategic Management 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.