Correlation Between First Trust and Usa Mutuals

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

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

Diversification Opportunities for First Trust and Usa Mutuals

0.34

Correlation Coefficient

First Trust  Usa Mutuals

Weak diversification

The 3 months correlation between First and Usa is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty and Usa Mutuals Navigator in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usa Mutuals Navigator 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 Specialty are associated (or correlated) with Usa Mutuals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usa Mutuals Navigator has no effect on the direction of First Trust i.e., First Trust and Usa Mutuals go up and down completely randomly.

Pair Corralation between First Trust and Usa Mutuals

Considering the 90-day investment horizon First Trust Specialty is expected to generate 3.23 times more return on investment than Usa Mutuals. However, First Trust is 3.23 times more volatile than Usa Mutuals Navigator. It trades about 0.11 of its potential returns per unit of risk. Usa Mutuals Navigator is currently generating about -0.01 per unit of risk. If you would invest  370.00  in First Trust Specialty on September 19, 2024 and sell it today you would earn a total of  58.00  from holding First Trust Specialty or generate 15.68% return on investment over 90 days.

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

First Trust Specialty  vs.  Usa Mutuals Navigator

First Trust Specialty

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Specialty are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, First Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Usa Mutuals Navigator

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with First Trust and Usa Mutuals

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

The idea behind First Trust Specialty and Usa Mutuals Navigator 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.