Correlation Between First Trust and Danske Invest

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Can any of the company-specific risk be diversified away by investing in both First Trust and Danske Invest 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 Danske Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust NASDAQ and Danske Invest Fjernsten, you can compare the effects of market volatilities on First Trust and Danske Invest 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 Danske Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Danske Invest.

Diversification Opportunities for First Trust and Danske Invest

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between First and Danske is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and Danske Invest Fjernsten in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest Fjernsten 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 NASDAQ are associated (or correlated) with Danske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Invest Fjernsten has no effect on the direction of First Trust i.e., First Trust and Danske Invest go up and down completely randomly.

Pair Corralation between First Trust and Danske Invest

Given the investment horizon of 90 days First Trust is expected to generate 2.75 times less return on investment than Danske Invest. In addition to that, First Trust is 3.01 times more volatile than Danske Invest Fjernsten. It trades about 0.01 of its total potential returns per unit of risk. Danske Invest Fjernsten is currently generating about 0.12 per unit of volatility. If you would invest  5,546  in Danske Invest Fjernsten on December 30, 2023 and sell it today you would earn a total of  96.00  from holding Danske Invest Fjernsten or generate 1.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

First Trust NASDAQ  vs.  Danske Invest Fjernsten

 Performance 
       Timeline  
First Trust NASDAQ 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days First Trust NASDAQ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's essential indicators remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.
Danske Invest Fjernsten 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Danske Invest Fjernsten has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, Danske Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Trust and Danske Invest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Trust and Danske Invest

The main advantage of trading using opposite First Trust and Danske Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Danske Invest 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 Danske Invest will offset losses from the drop in Danske Invest's long position.
The idea behind First Trust NASDAQ and Danske Invest Fjernsten 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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