Correlation Between First Trust and TradersAI Large

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

By analyzing existing cross correlation between First Trust Multi Asset and TradersAI Large Cap, you can compare the effects of market volatilities on First Trust and TradersAI Large 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 TradersAI Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and TradersAI Large.

Diversification Opportunities for First Trust and TradersAI Large

-0.38

Correlation Coefficient

First Trust  TradersAI Large

Very good diversification

The 3 months correlation between First and TradersAI is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Multi Asset and TradersAI Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TradersAI Large Cap 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 Multi Asset are associated (or correlated) with TradersAI Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TradersAI Large Cap has no effect on the direction of First Trust i.e., First Trust and TradersAI Large go up and down completely randomly.

Pair Corralation between First Trust and TradersAI Large

Given the investment horizon of 90 days First Trust Multi Asset is expected to generate 0.58 times more return on investment than TradersAI Large. However, First Trust Multi Asset is 1.72 times less risky than TradersAI Large. It trades about 0.15 of its potential returns per unit of risk. TradersAI Large Cap is currently generating about -0.11 per unit of risk. If you would invest  1,624  in First Trust Multi Asset on September 3, 2024 and sell it today you would earn a total of  63.00  from holding First Trust Multi Asset or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.19%
Values	Daily Returns

First Trust Multi Asset  vs.  TradersAI Large Cap

First Trust Multi

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi Asset are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, First Trust is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TradersAI Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TradersAI Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, TradersAI Large is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with First Trust and TradersAI Large

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

The idea behind First Trust Multi Asset and TradersAI Large Cap 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 Transaction History module to view history of all your transactions and understand their impact on performance.