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 Indxx, 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
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VanEck and First is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Digital Transformation and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx 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 Indxx 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 Transformation is expected to generate 5.28 times more return on investment than First Trust. However, VanEck Digital is 5.28 times more volatile than First Trust Indxx. It trades about 0.09 of its potential returns per unit of risk. First Trust Indxx is currently generating about 0.08 per unit of risk. If you would invest 558.00 in VanEck Digital Transformation on August 27, 2024 and sell it today you would earn a total of 1,289 from holding VanEck Digital Transformation or generate 231.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Digital Transformation vs. First Trust Indxx
Performance |
| Timeline |
| VanEck Digital Trans |
| First Trust Indxx |
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. Siren Nasdaq NexGen | First Trust vs. Amplify Transformational Data | First Trust vs. Global X Blockchain | First Trust vs. VanEck Digital Transformation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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