Correlation Between First Trust and Brandes Small
Can any of the company-specific risk be diversified away by investing in both First Trust and Brandes Small 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 First Trust and Brandes Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust S Network and Brandes Small Cap, you can compare the effects of market volatilities on First Trust and Brandes Small 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 First Trust with a short position of Brandes Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Brandes Small.
Diversification Opportunities for First Trust and Brandes Small
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Brandes is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding First Trust S Network and Brandes Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Small Cap and First Trust 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 First Trust S Network are associated (or correlated) with Brandes Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Small Cap has no effect on the direction of First Trust i.e., First Trust and Brandes Small go up and down completely randomly.
Pair Corralation between First Trust and Brandes Small
Given the investment horizon of 90 days First Trust S Network is expected to generate 1.85 times more return on investment than Brandes Small. However, First Trust is 1.85 times more volatile than Brandes Small Cap. It trades about 0.22 of its potential returns per unit of risk. Brandes Small Cap is currently generating about 0.25 per unit of risk. If you would invest 5,520 in First Trust S Network on March 2, 2024 and sell it today you would earn a total of 343.00 from holding First Trust S Network or generate 6.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 90.91% |
Values | Daily Returns |
First Trust S Network vs. Brandes Small Cap
Performance |
Timeline |
First Trust S |
Brandes Small Cap |
First Trust and Brandes Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and Brandes Small
The main advantage of trading using opposite First Trust and Brandes Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Brandes Small 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 Brandes Small will offset losses from the drop in Brandes Small's long position.First Trust vs. Vanguard Consumer Staples | First Trust vs. Vanguard Industrials Index | First Trust vs. Vanguard Communication Services | First Trust vs. Vanguard Materials Index |
Brandes Small vs. Lebenthal Lisanti Small | Brandes Small vs. Barloworld Ltd ADR | Brandes Small vs. Via Renewables | Brandes Small vs. T Rowe Price |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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