Correlation Between First Trust and CI Health

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

By analyzing existing cross correlation between First Trust NYSE and CI Health Care, you can compare the effects of market volatilities on First Trust and CI Health 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 CI Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and CI Health.

Diversification Opportunities for First Trust and CI Health

0.08

Correlation Coefficient

First Trust  CI Health

Significant diversification

The 3 months correlation between First and FHI is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NYSE and CI Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Health Care 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 NYSE are associated (or correlated) with CI Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Health Care has no effect on the direction of First Trust i.e., First Trust and CI Health go up and down completely randomly.

Pair Corralation between First Trust and CI Health

Assuming the 90 days trading horizon First Trust NYSE is expected to generate 1.18 times more return on investment than CI Health. However, First Trust is 1.18 times more volatile than CI Health Care. It trades about 0.07 of its potential returns per unit of risk. CI Health Care is currently generating about -0.03 per unit of risk. If you would invest  2,731  in First Trust NYSE on April 23, 2025 and sell it today you would earn a total of  112.00  from holding First Trust NYSE or generate 4.1% return on investment over 90 days.

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

First Trust NYSE  vs.  CI Health Care

First Trust NYSE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NYSE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Health Care

Risk-Adjusted Performance

Very Weak

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

Pair Trading with First Trust and CI Health

The main advantage of trading using opposite First Trust and CI Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, CI Health 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 CI Health will offset losses from the drop in CI Health's long position.

The idea behind First Trust NYSE and CI Health Care 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.