Correlation Between First Trust and 573334AK5

Can any of the company-specific risk be diversified away by investing in both First Trust and 573334AK5 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 573334AK5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Trust Exchange Traded and MMLP 115 15 FEB 28, you can compare the effects of market volatilities on First Trust and 573334AK5 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 573334AK5. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and 573334AK5.

Diversification Opportunities for First Trust and 573334AK5

-0.47

Correlation Coefficient

First Trust  573334AK5

Very good diversification

The 3 months correlation between First and 573334AK5 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and MMLP 115 15 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMLP 115 15 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 Exchange Traded are associated (or correlated) with 573334AK5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMLP 115 15 has no effect on the direction of First Trust i.e., First Trust and 573334AK5 go up and down completely randomly.

Pair Corralation between First Trust and 573334AK5

Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.58 times more return on investment than 573334AK5. However, First Trust Exchange Traded is 1.72 times less risky than 573334AK5. It trades about 0.12 of its potential returns per unit of risk. MMLP 115 15 FEB 28 is currently generating about -0.18 per unit of risk. If you would invest  2,685  in First Trust Exchange Traded on September 23, 2024 and sell it today you would earn a total of  135.00  from holding First Trust Exchange Traded or generate 5.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.85%
Values	Daily Returns

First Trust Exchange Traded  vs.  MMLP 115 15 FEB 28

First Trust Exchange

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

MMLP 115 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MMLP 115 15 FEB 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MMLP 115 15 FEB 28 investors.

Pair Trading with First Trust and 573334AK5

The main advantage of trading using opposite First Trust and 573334AK5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, 573334AK5 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 573334AK5 will offset losses from the drop in 573334AK5's long position.

The idea behind First Trust Exchange Traded and MMLP 115 15 FEB 28 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.