Correlation Between Absolute Convertible and First Trustconfluence
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and First Trustconfluence 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 Absolute Convertible and First Trustconfluence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and First Trustconfluence Small, you can compare the effects of market volatilities on Absolute Convertible and First Trustconfluence 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 Absolute Convertible with a short position of First Trustconfluence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and First Trustconfluence.
Diversification Opportunities for Absolute Convertible and First Trustconfluence
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Absolute and First is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and First Trustconfluence Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trustconfluence and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with First Trustconfluence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trustconfluence has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and First Trustconfluence go up and down completely randomly.
Pair Corralation between Absolute Convertible and First Trustconfluence
Assuming the 90 days horizon Absolute Convertible is expected to generate 3.83 times less return on investment than First Trustconfluence. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 19.26 times less risky than First Trustconfluence. It trades about 0.43 of its potential returns per unit of risk. First Trustconfluence Small is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,074 in First Trustconfluence Small on June 2, 2025 and sell it today you would earn a total of 138.00 from holding First Trustconfluence Small or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. First Trustconfluence Small
Performance |
| Timeline |
| Absolute Convertible |
| First Trustconfluence |
Risk-Adjusted Performance
Mild
Weak | Strong |
Absolute Convertible and First Trustconfluence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and First Trustconfluence
The main advantage of trading using opposite Absolute Convertible and First Trustconfluence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, First Trustconfluence 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 Trustconfluence will offset losses from the drop in First Trustconfluence's long position.The idea behind Absolute Convertible Arbitrage and First Trustconfluence Small 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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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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