Correlation Between VanEck Fallen and First Trust
Can any of the company-specific risk be diversified away by investing in both VanEck Fallen and First Trust 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 VanEck Fallen and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Fallen Angel and First Trust Multi Asset, you can compare the effects of market volatilities on VanEck Fallen and First Trust 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 VanEck Fallen with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Fallen and First Trust.
Diversification Opportunities for VanEck Fallen and First Trust
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Fallen Angel and First Trust Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and VanEck Fallen 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 VanEck Fallen Angel are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Multi has no effect on the direction of VanEck Fallen i.e., VanEck Fallen and First Trust go up and down completely randomly.
Pair Corralation between VanEck Fallen and First Trust
Given the investment horizon of 90 days VanEck Fallen is expected to generate 2.53 times less return on investment than First Trust. But when comparing it to its historical volatility, VanEck Fallen Angel is 1.48 times less risky than First Trust. It trades about 0.11 of its potential returns per unit of risk. First Trust Multi Asset is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,646 in First Trust Multi Asset on August 29, 2024 and sell it today you would earn a total of 29.00 from holding First Trust Multi Asset or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Fallen Angel vs. First Trust Multi Asset
Performance |
| Timeline |
| VanEck Fallen Angel |
| First Trust Multi |
VanEck Fallen and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Fallen and First Trust
The main advantage of trading using opposite VanEck Fallen and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Fallen position performs unexpectedly, First Trust 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 Trust will offset losses from the drop in First Trust's long position.| VanEck Fallen vs. iShares Edge Investment | VanEck Fallen vs. iShares Interest Rate | VanEck Fallen vs. iShares Intl High | VanEck Fallen vs. iShares JP Morgan |
| First Trust vs. Global X SuperIncome | First Trust vs. iShares Morningstar Multi Asset | First Trust vs. Invesco CEF Income | First Trust vs. VanEck Fallen Angel |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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