Correlation Between FT Vest and Themes Small
Can any of the company-specific risk be diversified away by investing in both FT Vest and Themes Small 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 FT Vest and Themes Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Vest Equity and Themes Small Cap, you can compare the effects of market volatilities on FT Vest and Themes Small 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 FT Vest with a short position of Themes Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and Themes Small.
Diversification Opportunities for FT Vest and Themes Small
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between DHDG and Themes is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and Themes Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Small Cap and FT Vest 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 FT Vest Equity are associated (or correlated) with Themes Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Small Cap has no effect on the direction of FT Vest i.e., FT Vest and Themes Small go up and down completely randomly.
Pair Corralation between FT Vest and Themes Small
Given the investment horizon of 90 days FT Vest Equity is expected to generate 0.34 times more return on investment than Themes Small. However, FT Vest Equity is 2.98 times less risky than Themes Small. It trades about 0.24 of its potential returns per unit of risk. Themes Small Cap is currently generating about 0.01 per unit of risk. If you would invest 3,080 in FT Vest Equity on September 13, 2024 and sell it today you would earn a total of 42.00 from holding FT Vest Equity or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
FT Vest Equity vs. Themes Small Cap
Performance |
| Timeline |
| FT Vest Equity |
| Themes Small Cap |
FT Vest and Themes Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Vest and Themes Small
The main advantage of trading using opposite FT Vest and Themes Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest position performs unexpectedly, Themes Small 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 Themes Small will offset losses from the drop in Themes Small's long position.| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. JPMorgan Fundamental Data | FT Vest vs. Matthews China Discovery |
| Themes Small vs. FT Vest Equity | Themes Small vs. Northern Lights | Themes Small vs. Dimensional International High | Themes Small vs. JPMorgan Fundamental Data |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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