Correlation Between Pyxis Tankers and First Trust

Can any of the company-specific risk be diversified away by investing in both Pyxis Tankers 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 Pyxis Tankers and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pyxis Tankers and First Trust Dow, you can compare the effects of market volatilities on Pyxis Tankers 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 Pyxis Tankers with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyxis Tankers and First Trust.

Diversification Opportunities for Pyxis Tankers and First Trust

0.32

Correlation Coefficient

Pyxis Tankers  First Trust

Weak diversification

The 3 months correlation between Pyxis and First is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Pyxis Tankers and First Trust Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dow and Pyxis Tankers 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 Pyxis Tankers 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 Dow has no effect on the direction of Pyxis Tankers i.e., Pyxis Tankers and First Trust go up and down completely randomly.

Pair Corralation between Pyxis Tankers and First Trust

Considering the 90-day investment horizon Pyxis Tankers is expected to generate 1.63 times more return on investment than First Trust. However, Pyxis Tankers is 1.63 times more volatile than First Trust Dow. It trades about -0.04 of its potential returns per unit of risk. First Trust Dow is currently generating about -0.21 per unit of risk. If you would invest  470.00  in Pyxis Tankers on January 20, 2024 and sell it today you would lose (8.00) from holding Pyxis Tankers or give up 1.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pyxis Tankers  vs.  First Trust Dow

Pyxis Tankers

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pyxis Tankers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pyxis Tankers is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

First Trust Dow

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Dow are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pyxis Tankers and First Trust

The main advantage of trading using opposite Pyxis Tankers and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyxis Tankers 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 Pyxis Tankers and First Trust Dow 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.