Correlation Between VanEck Digital and First Trust
Can any of the company-specific risk be diversified away by investing in both VanEck Digital 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 Digital 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 Digital Transformation and First Trust SkyBridge, you can compare the effects of market volatilities on VanEck Digital 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 Digital with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Digital and First Trust.
Diversification Opportunities for VanEck Digital and First Trust
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between VanEck and First is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Digital Transformation and First Trust SkyBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust SkyBridge and VanEck Digital 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 Digital Transformation 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 SkyBridge has no effect on the direction of VanEck Digital i.e., VanEck Digital and First Trust go up and down completely randomly.
Pair Corralation between VanEck Digital and First Trust
Given the investment horizon of 90 days VanEck Digital is expected to generate 1.19 times less return on investment than First Trust. But when comparing it to its historical volatility, VanEck Digital Transformation is 1.09 times less risky than First Trust. It trades about 0.22 of its potential returns per unit of risk. First Trust SkyBridge is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,426 in First Trust SkyBridge on August 24, 2024 and sell it today you would earn a total of 535.00 from holding First Trust SkyBridge or generate 37.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Digital Transformation vs. First Trust SkyBridge
Performance |
| Timeline |
| VanEck Digital Trans |
| First Trust SkyBridge |
VanEck Digital and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Digital and First Trust
The main advantage of trading using opposite VanEck Digital and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Digital 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 Digital vs. Bitwise Crypto Industry | VanEck Digital vs. Global X Blockchain | VanEck Digital vs. First Trust Indxx | VanEck Digital vs. First Trust SkyBridge |
| First Trust vs. VanEck Digital Transformation | First Trust vs. Bitwise Crypto Industry | First Trust vs. Global X Blockchain | First Trust vs. First Trust Indxx |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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