Correlation Between First Trust and PSMC
Can any of the company-specific risk be diversified away by investing in both First Trust and PSMC 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 PSMC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Japan and PSMC, you can compare the effects of market volatilities on First Trust and PSMC 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 PSMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and PSMC.
Diversification Opportunities for First Trust and PSMC
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and PSMC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Japan and PSMC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSMC 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 Japan are associated (or correlated) with PSMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSMC has no effect on the direction of First Trust i.e., First Trust and PSMC go up and down completely randomly.
Pair Corralation between First Trust and PSMC
If you would invest 1,206 in PSMC on January 25, 2024 and sell it today you would earn a total of 0.00 from holding PSMC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
First Trust Japan vs. PSMC
Performance |
| Timeline |
| First Trust Japan |
| PSMC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and PSMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and PSMC
The main advantage of trading using opposite First Trust and PSMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, PSMC 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 PSMC will offset losses from the drop in PSMC's long position.| First Trust vs. WisdomTree Europe Hedged | First Trust vs. WisdomTree Europe SmallCap | First Trust vs. iShares MSCI Germany |
| PSMC vs. Schwab Large Cap ETF | PSMC vs. iShares Core SP | PSMC vs. iShares Core Dividend | PSMC vs. Pacer Cash Cows |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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