Correlation Between MegaLong Canadian and First Trust

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

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

Diversification Opportunities for MegaLong Canadian and First Trust

0.0

Correlation Coefficient

MegaLong Canadian  First Trust

Pay attention - limited upside

The 3 months correlation between MegaLong and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MegaLong Canadian Banks and First Trust Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Large and MegaLong Canadian 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 MegaLong Canadian Banks 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 Large has no effect on the direction of MegaLong Canadian i.e., MegaLong Canadian and First Trust go up and down completely randomly.

Pair Corralation between MegaLong Canadian and First Trust

If you would invest (100.00) in MegaLong Canadian Banks on August 26, 2025 and sell it today you would earn a total of  100.00  from holding MegaLong Canadian Banks or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MegaLong Canadian Banks  vs.  First Trust Large

MegaLong Canadian Banks

Risk-Adjusted Performance

Solid

Over the last 90 days MegaLong Canadian Banks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MegaLong Canadian is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

First Trust Large

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trust Large has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, First Trust is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MegaLong Canadian and First Trust

The main advantage of trading using opposite MegaLong Canadian and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MegaLong Canadian 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 MegaLong Canadian Banks and First Trust Large 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.