Correlation Between Cohen Steers and First Trust

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

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

Diversification Opportunities for Cohen Steers and First Trust

-0.12

Correlation Coefficient

Cohen Steers  First Trust

Good diversification

The 3 months correlation between Cohen and First is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Steers Total and First Trust Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Specialty and Cohen Steers 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 Cohen Steers Total are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Specialty has no effect on the direction of Cohen Steers i.e., Cohen Steers and First Trust go up and down completely randomly.

Pair Corralation between Cohen Steers and First Trust

Considering the 90-day investment horizon Cohen Steers Total is expected to under-perform the First Trust. In addition to that, Cohen Steers is 1.33 times more volatile than First Trust Specialty. It trades about -0.1 of its total potential returns per unit of risk. First Trust Specialty is currently generating about 0.16 per unit of volatility. If you would invest  398.00  in First Trust Specialty on September 14, 2024 and sell it today you would earn a total of  32.00  from holding First Trust Specialty or generate 8.04% return on investment over 90 days.

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

Cohen Steers Total  vs.  First Trust Specialty

Cohen Steers Total

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cohen Steers Total has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the fund traders.

First Trust Specialty

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Specialty are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cohen Steers and First Trust

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

The idea behind Cohen Steers Total and First Trust Specialty 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.