Correlation Between First Trust and Abrdn Bloomberg

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

By analyzing existing cross correlation between First Trust Global and abrdn Bloomberg All, you can compare the effects of market volatilities on First Trust and Abrdn Bloomberg 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 Abrdn Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Abrdn Bloomberg.

Diversification Opportunities for First Trust and Abrdn Bloomberg

0.85

Correlation Coefficient

First Trust  Abrdn Bloomberg

Very poor diversification

The 3 months correlation between First and Abrdn is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Global and abrdn Bloomberg All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Bloomberg All 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 Global are associated (or correlated) with Abrdn Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Bloomberg All has no effect on the direction of First Trust i.e., First Trust and Abrdn Bloomberg go up and down completely randomly.

Pair Corralation between First Trust and Abrdn Bloomberg

Given the investment horizon of 90 days First Trust Global is expected to generate 1.0 times more return on investment than Abrdn Bloomberg. However, First Trust Global is 1.0 times less risky than Abrdn Bloomberg. It trades about 0.04 of its potential returns per unit of risk. abrdn Bloomberg All is currently generating about 0.04 per unit of risk. If you would invest  2,329  in First Trust Global on February 2, 2025 and sell it today you would earn a total of  98.00  from holding First Trust Global or generate 4.21% return on investment over 90 days.

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

First Trust Global  vs.  abrdn Bloomberg All

First Trust Global

Risk-Adjusted Performance

Very Weak

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

abrdn Bloomberg All

Risk-Adjusted Performance

Very Weak

Over the last 90 days abrdn Bloomberg All has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Abrdn Bloomberg is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First Trust and Abrdn Bloomberg

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

The idea behind First Trust Global and abrdn Bloomberg All 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.