Correlation Between FT Vest and Roundhill ETF
Can any of the company-specific risk be diversified away by investing in both FT Vest and Roundhill ETF 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 Roundhill ETF 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 Roundhill ETF Trust, you can compare the effects of market volatilities on FT Vest and Roundhill ETF 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 Roundhill ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and Roundhill ETF.
Diversification Opportunities for FT Vest and Roundhill ETF
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DHDG and Roundhill is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and Roundhill ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill ETF Trust 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 Roundhill ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill ETF Trust has no effect on the direction of FT Vest i.e., FT Vest and Roundhill ETF go up and down completely randomly.
Pair Corralation between FT Vest and Roundhill ETF
Given the investment horizon of 90 days FT Vest is expected to generate 3.0 times less return on investment than Roundhill ETF. But when comparing it to its historical volatility, FT Vest Equity is 1.54 times less risky than Roundhill ETF. It trades about 0.05 of its potential returns per unit of risk. Roundhill ETF Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,256 in Roundhill ETF Trust on November 28, 2024 and sell it today you would earn a total of 631.00 from holding Roundhill ETF Trust or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 46.99% |
| Values | Daily Returns |
FT Vest Equity vs. Roundhill ETF Trust
Performance |
| Timeline |
| FT Vest Equity |
| Roundhill ETF Trust |
FT Vest and Roundhill ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Vest and Roundhill ETF
The main advantage of trading using opposite FT Vest and Roundhill ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest position performs unexpectedly, Roundhill ETF 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 Roundhill ETF will offset losses from the drop in Roundhill ETF's long position.| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded | FT Vest vs. EA Series Trust |
| Roundhill ETF vs. FT Vest Equity | Roundhill ETF vs. Northern Lights | Roundhill ETF vs. Dimensional International High | Roundhill ETF vs. First Trust Exchange Traded |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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