Correlation Between W P and First Trust
Can any of the company-specific risk be diversified away by investing in both W P 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 W P and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between W P Carey and First Trust Japan, you can compare the effects of market volatilities on W P 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 W P with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of W P and First Trust.
Diversification Opportunities for W P and First Trust
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WPC and First is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey 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 W P 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 W P Carey 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 W P i.e., W P and First Trust go up and down completely randomly.
Pair Corralation between W P and First Trust
Considering the 90-day investment horizon W P Carey is expected to generate 1.66 times more return on investment than First Trust. However, W P is 1.66 times more volatile than First Trust Japan. It trades about 0.09 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 5,472 in W P Carey on January 25, 2024 and sell it today you would earn a total of 159.00 from holding W P Carey or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
W P Carey vs. First Trust Japan
Performance |
| Timeline |
| W P Carey |
| First Trust Japan |
W P and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with W P and First Trust
The main advantage of trading using opposite W P and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W P 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.| W P vs. Investcorp Credit Management | W P vs. Mingzhu Logistics HoldingsLtd | W P vs. Aquagold International | W P vs. Morningstar Unconstrained Allocation |
| First Trust vs. WisdomTree Europe Hedged | First Trust vs. WisdomTree Europe SmallCap | First Trust vs. iShares MSCI Germany |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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