Correlation Between First Trust and VictoryShares WestEnd
Can any of the company-specific risk be diversified away by investing in both First Trust and VictoryShares WestEnd 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 VictoryShares WestEnd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust TCW and VictoryShares WestEnd Economic, you can compare the effects of market volatilities on First Trust and VictoryShares WestEnd 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 VictoryShares WestEnd. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and VictoryShares WestEnd.
Diversification Opportunities for First Trust and VictoryShares WestEnd
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and VictoryShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and VictoryShares WestEnd Economic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares WestEnd 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 TCW are associated (or correlated) with VictoryShares WestEnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares WestEnd has no effect on the direction of First Trust i.e., First Trust and VictoryShares WestEnd go up and down completely randomly.
Pair Corralation between First Trust and VictoryShares WestEnd
Given the investment horizon of 90 days First Trust TCW is expected to generate 1.04 times more return on investment than VictoryShares WestEnd. However, First Trust is 1.04 times more volatile than VictoryShares WestEnd Economic. It trades about 0.11 of its potential returns per unit of risk. VictoryShares WestEnd Economic is currently generating about 0.09 per unit of risk. If you would invest 2,091 in First Trust TCW on September 1, 2024 and sell it today you would earn a total of 23.00 from holding First Trust TCW or generate 1.1% 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 TCW vs. VictoryShares WestEnd Economic
Performance |
| Timeline |
| First Trust TCW |
| VictoryShares WestEnd |
First Trust and VictoryShares WestEnd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and VictoryShares WestEnd
The main advantage of trading using opposite First Trust and VictoryShares WestEnd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, VictoryShares WestEnd 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 VictoryShares WestEnd will offset losses from the drop in VictoryShares WestEnd's long position.| First Trust vs. First Trust TCW | First Trust vs. First Trust TCW | First Trust vs. First Trust Ultra | First Trust vs. First Trust Short |
| VictoryShares WestEnd vs. BlackRock High Yield | VictoryShares WestEnd vs. Hartford Short Duration | VictoryShares WestEnd vs. SSGA Active Trust | VictoryShares WestEnd vs. Aquagold International |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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