Correlation Between Under Armour and First Trust
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and First Trust Japan, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and First Trust.
Diversification Opportunities for Under Armour and First Trust
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Under and First is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and First Trust Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Japan and Under Armour 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 Under Armour C 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 Japan has no effect on the direction of Under Armour i.e., Under Armour and First Trust go up and down completely randomly.
Pair Corralation between Under Armour and First Trust
Allowing for the 90-day total investment horizon Under Armour C is expected to generate 1.46 times more return on investment than First Trust. However, Under Armour is 1.46 times more volatile than First Trust Japan. It trades about -0.1 of its potential returns per unit of risk. First Trust Japan is currently generating about -0.19 per unit of risk. If you would invest 683.00 in Under Armour C on January 25, 2024 and sell it today you would lose (21.00) from holding Under Armour C or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. First Trust Japan
Performance |
| Timeline |
| Under Armour C |
| First Trust Japan |
Under Armour and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and First Trust
The main advantage of trading using opposite Under Armour and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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 Under Armour C and First Trust Japan 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.| First Trust vs. iShares MSCI Israel | First Trust vs. iShares MSCI China | First Trust vs. Aquagold International | First Trust vs. Morningstar Unconstrained Allocation |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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