Correlation Between First Trust and VanEck Digital
Can any of the company-specific risk be diversified away by investing in both First Trust and VanEck Digital 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 VanEck Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SkyBridge and VanEck Digital Transformation, you can compare the effects of market volatilities on First Trust and VanEck Digital 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 VanEck Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and VanEck Digital.
Diversification Opportunities for First Trust and VanEck Digital
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and VanEck is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and VanEck Digital Transformation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Digital Trans 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 SkyBridge are associated (or correlated) with VanEck Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Digital Trans has no effect on the direction of First Trust i.e., First Trust and VanEck Digital go up and down completely randomly.
Pair Corralation between First Trust and VanEck Digital
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 1.07 times more return on investment than VanEck Digital. However, First Trust is 1.07 times more volatile than VanEck Digital Transformation. It trades about 0.15 of its potential returns per unit of risk. VanEck Digital Transformation is currently generating about 0.15 per unit of risk. If you would invest 1,295 in First Trust SkyBridge on August 23, 2024 and sell it today you would earn a total of 666.00 from holding First Trust SkyBridge or generate 51.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. VanEck Digital Transformation
Performance |
| Timeline |
| First Trust SkyBridge |
| VanEck Digital Trans |
First Trust and VanEck Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and VanEck Digital
The main advantage of trading using opposite First Trust and VanEck Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, VanEck Digital 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 VanEck Digital will offset losses from the drop in VanEck Digital's long position.| First Trust vs. VanEck Digital Transformation | First Trust vs. Bitwise Crypto Industry | First Trust vs. Global X Blockchain | First Trust vs. First Trust Indxx |
| VanEck Digital vs. Bitwise Crypto Industry | VanEck Digital vs. Global X Blockchain | VanEck Digital vs. First Trust Indxx | VanEck Digital vs. First Trust SkyBridge |
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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