Correlation Between First Trust and Brompton Global

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

Diversification Opportunities for First Trust and Brompton Global

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between First and Brompton is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Brompton Global Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Global Dividend 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 Senior are associated (or correlated) with Brompton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Global Dividend has no effect on the direction of First Trust i.e., First Trust and Brompton Global go up and down completely randomly.

Pair Corralation between First Trust and Brompton Global

Assuming the 90 days trading horizon First Trust is expected to generate 2.96 times less return on investment than Brompton Global. But when comparing it to its historical volatility, First Trust Senior is 2.37 times less risky than Brompton Global. It trades about 0.19 of its potential returns per unit of risk. Brompton Global Dividend is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,087  in Brompton Global Dividend on April 22, 2025 and sell it today you would earn a total of  183.00  from holding Brompton Global Dividend or generate 8.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

First Trust Senior  vs.  Brompton Global Dividend

 Performance 
       Timeline  
First Trust Senior 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Senior are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Brompton Global Dividend 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Global Dividend are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brompton Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Trust and Brompton Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Trust and Brompton Global

The main advantage of trading using opposite First Trust and Brompton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Brompton Global 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 Brompton Global will offset losses from the drop in Brompton Global's long position.
The idea behind First Trust Senior and Brompton Global Dividend 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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