Correlation Between US Global and First Trust
Can any of the company-specific risk be diversified away by investing in both US Global 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 US Global and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Sea and First Trust Preferred, you can compare the effects of market volatilities on US Global 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 US Global with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and First Trust.
Diversification Opportunities for US Global and First Trust
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SEA and First is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding US Global Sea and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and US Global 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 US Global Sea 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 Preferred has no effect on the direction of US Global i.e., US Global and First Trust go up and down completely randomly.
Pair Corralation between US Global and First Trust
Considering the 90-day investment horizon US Global Sea is expected to under-perform the First Trust. In addition to that, US Global is 3.25 times more volatile than First Trust Preferred. It trades about -0.03 of its total potential returns per unit of risk. First Trust Preferred is currently generating about 0.31 per unit of volatility. If you would invest 1,706 in First Trust Preferred on December 29, 2023 and sell it today you would earn a total of 26.00 from holding First Trust Preferred or generate 1.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
US Global Sea vs. First Trust Preferred
Performance |
Timeline |
US Global Sea |
First Trust Preferred |
US Global and First Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with US Global and First Trust
The main advantage of trading using opposite US Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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.US Global vs. IShares US Dividend | US Global vs. Martin Currie Sustainable | US Global vs. VictoryShares THB Mid | US Global vs. AdvisorShares Gerber Kawasaki |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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