Correlation Between ADRA and First Trust
Can any of the company-specific risk be diversified away by investing in both ADRA 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 ADRA and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADRA and First Trust Large, you can compare the effects of market volatilities on ADRA 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 ADRA with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRA and First Trust.
Diversification Opportunities for ADRA and First Trust
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between ADRA and First is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ADRA and First Trust Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Large and ADRA 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 ADRA 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 Large has no effect on the direction of ADRA i.e., ADRA and First Trust go up and down completely randomly.
Pair Corralation between ADRA and First Trust
If you would invest 329.00 in ADRA on January 26, 2024 and sell it today you would earn a total of 0.00 from holding ADRA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 9.52% |
| Values | Daily Returns |
ADRA vs. First Trust Large
Performance |
| Timeline |
| ADRA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Large |
ADRA and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRA and First Trust
The main advantage of trading using opposite ADRA and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRA 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.| ADRA vs. Vanguard FTSE Europe | ADRA vs. Vanguard Large Cap Index | ADRA vs. Vanguard Materials Index | ADRA vs. Vanguard FTSE All World |
| First Trust vs. Hartford Multifactor Emerging | First Trust vs. Hartford Multifactor Developed | First Trust vs. iShares Equity Factor | First Trust vs. SPDR MSCI USA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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