Correlation Between BrandywineGLOBAL and First Trust
Can any of the company-specific risk be diversified away by investing in both BrandywineGLOBAL 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 BrandywineGLOBAL and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BrandywineGLOBAL Dynamic and First Trust Growth, you can compare the effects of market volatilities on BrandywineGLOBAL 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 BrandywineGLOBAL with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrandywineGLOBAL and First Trust.
Diversification Opportunities for BrandywineGLOBAL and First Trust
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BrandywineGLOBAL and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BrandywineGLOBAL Dynamic and First Trust Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Growth and BrandywineGLOBAL 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 BrandywineGLOBAL Dynamic 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 Growth has no effect on the direction of BrandywineGLOBAL i.e., BrandywineGLOBAL and First Trust go up and down completely randomly.
Pair Corralation between BrandywineGLOBAL and First Trust
Given the investment horizon of 90 days BrandywineGLOBAL is expected to generate 1.72 times less return on investment than First Trust. But when comparing it to its historical volatility, BrandywineGLOBAL Dynamic is 1.15 times less risky than First Trust. It trades about 0.06 of its potential returns per unit of risk. First Trust Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,145 in First Trust Growth on August 24, 2024 and sell it today you would earn a total of 1,137 from holding First Trust Growth or generate 53.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BrandywineGLOBAL Dynamic vs. First Trust Growth
Performance |
| Timeline |
| BrandywineGLOBAL D |
| First Trust Growth |
BrandywineGLOBAL and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BrandywineGLOBAL and First Trust
The main advantage of trading using opposite BrandywineGLOBAL and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BrandywineGLOBAL 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.| BrandywineGLOBAL vs. Vanguard Russell 1000 | BrandywineGLOBAL vs. Vanguard Russell 2000 | BrandywineGLOBAL vs. Vanguard Russell 3000 | BrandywineGLOBAL vs. Vanguard Russell 2000 |
| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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