Correlation Between ETF Series and FT Vest
Can any of the company-specific risk be diversified away by investing in both ETF Series and FT Vest 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 ETF Series and FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and FT Vest Equity, you can compare the effects of market volatilities on ETF Series and FT Vest 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 ETF Series with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and FT Vest.
Diversification Opportunities for ETF Series and FT Vest
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ETF and DHDG is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity and ETF Series 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 ETF Series Solutions are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of ETF Series i.e., ETF Series and FT Vest go up and down completely randomly.
Pair Corralation between ETF Series and FT Vest
Given the investment horizon of 90 days ETF Series Solutions is expected to generate 1.36 times more return on investment than FT Vest. However, ETF Series is 1.36 times more volatile than FT Vest Equity. It trades about 0.11 of its potential returns per unit of risk. FT Vest Equity is currently generating about 0.07 per unit of risk. If you would invest 2,716 in ETF Series Solutions on November 3, 2024 and sell it today you would earn a total of 260.00 from holding ETF Series Solutions or generate 9.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 57.26% |
| Values | Daily Returns |
ETF Series Solutions vs. FT Vest Equity
Performance |
| Timeline |
| ETF Series Solutions |
| FT Vest Equity |
ETF Series and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and FT Vest
The main advantage of trading using opposite ETF Series and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| ETF Series vs. FT Vest Equity | ETF Series vs. Northern Lights | ETF Series vs. Dimensional International High | ETF Series vs. First Trust Exchange Traded |
| FT Vest vs. Northern Lights | FT Vest vs. iShares Nasdaq 100 ex | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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