Correlation Between First Trust and Cohen Steers

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

By analyzing existing cross correlation between First Trust Energy and Cohen Steers Qualityome, you can compare the effects of market volatilities on First Trust and Cohen Steers 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 Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Cohen Steers.

Diversification Opportunities for First Trust and Cohen Steers

-0.35

Correlation Coefficient

First Trust  Cohen Steers

Very good diversification

The 3 months correlation between First and Cohen is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Energy and Cohen Steers Qualityome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Qualityome 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 Energy are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Qualityome has no effect on the direction of First Trust i.e., First Trust and Cohen Steers go up and down completely randomly.

Pair Corralation between First Trust and Cohen Steers

If you would invest  1,364  in Cohen Steers Qualityome on August 31, 2024 and sell it today you would earn a total of  29.00  from holding Cohen Steers Qualityome or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

First Trust Energy  vs.  Cohen Steers Qualityome

First Trust Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Cohen Steers Qualityome

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Steers Qualityome are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Cohen Steers is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First Trust and Cohen Steers

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

The idea behind First Trust Energy and Cohen Steers Qualityome 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.