Correlation Between Usa Mutuals and First Trust

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

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

Diversification Opportunities for Usa Mutuals and First Trust

-0.35

Correlation Coefficient

Usa Mutuals  First Trust

Very good diversification

The 3 months correlation between Usa and First is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Usa Mutuals Vice 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 Usa Mutuals 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 Usa Mutuals Vice 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 Usa Mutuals i.e., Usa Mutuals and First Trust go up and down completely randomly.

Pair Corralation between Usa Mutuals and First Trust

Assuming the 90 days horizon Usa Mutuals Vice is expected to under-perform the First Trust. But the mutual fund apears to be less risky and, when comparing its historical volatility, Usa Mutuals Vice is 1.09 times less risky than First Trust. The mutual fund trades about -0.05 of its potential returns per unit of risk. The First Trust Specialty is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  395.00  in First Trust Specialty on September 20, 2024 and sell it today you would earn a total of  17.00  from holding First Trust Specialty or generate 4.3% return on investment over 90 days.

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

Usa Mutuals Vice  vs.  First Trust Specialty

Usa Mutuals Vice

Risk-Adjusted Performance

0 of 100

Very Weak

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

First Trust Specialty

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Specialty are ranked lower than 6 (%) 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.

Pair Trading with Usa Mutuals and First Trust

The main advantage of trading using opposite Usa Mutuals and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usa Mutuals 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 Usa Mutuals Vice 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.