Correlation Between First Trust and Doubleline Opportunistic

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

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

Diversification Opportunities for First Trust and Doubleline Opportunistic

-0.47

Correlation Coefficient

First Trust  Doubleline Opportunistic

Very good diversification

The 3 months correlation between First and Doubleline is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Trust IndustrialsProduce and Doubleline Opportunistic Credi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubleline Opportunistic 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 IndustrialsProducer are associated (or correlated) with Doubleline Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubleline Opportunistic has no effect on the direction of First Trust i.e., First Trust and Doubleline Opportunistic go up and down completely randomly.

Pair Corralation between First Trust and Doubleline Opportunistic

Considering the 90-day investment horizon First Trust IndustrialsProducer is expected to generate 2.26 times more return on investment than Doubleline Opportunistic. However, First Trust is 2.26 times more volatile than Doubleline Opportunistic Credit. It trades about 0.24 of its potential returns per unit of risk. Doubleline Opportunistic Credit is currently generating about -0.02 per unit of risk. If you would invest  7,113  in First Trust IndustrialsProducer on September 4, 2024 and sell it today you would earn a total of  1,150  from holding First Trust IndustrialsProducer or generate 16.17% return on investment over 90 days.

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

First Trust IndustrialsProduce  vs.  Doubleline Opportunistic Credi

First Trust Industri

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust IndustrialsProducer are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, First Trust reported solid returns over the last few months and may actually be approaching a breakup point.

Doubleline Opportunistic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Doubleline Opportunistic Credit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Doubleline Opportunistic 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 Doubleline Opportunistic

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

The idea behind First Trust IndustrialsProducer and Doubleline Opportunistic Credit 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.