Correlation Between First Trust and Virtus LifeSci
Can any of the company-specific risk be diversified away by investing in both First Trust and Virtus LifeSci 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 Virtus LifeSci into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust NYSE and Virtus LifeSci Biotech, you can compare the effects of market volatilities on First Trust and Virtus LifeSci 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 Virtus LifeSci. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Virtus LifeSci.
Diversification Opportunities for First Trust and Virtus LifeSci
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Virtus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NYSE and Virtus LifeSci Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus LifeSci Biotech 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 NYSE are associated (or correlated) with Virtus LifeSci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus LifeSci Biotech has no effect on the direction of First Trust i.e., First Trust and Virtus LifeSci go up and down completely randomly.
Pair Corralation between First Trust and Virtus LifeSci
Considering the 90-day investment horizon First Trust NYSE is expected to generate 0.93 times more return on investment than Virtus LifeSci. However, First Trust NYSE is 1.07 times less risky than Virtus LifeSci. It trades about 0.08 of its potential returns per unit of risk. Virtus LifeSci Biotech is currently generating about 0.05 per unit of risk. If you would invest 17,001 in First Trust NYSE on August 30, 2024 and sell it today you would earn a total of 447.00 from holding First Trust NYSE or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust NYSE vs. Virtus LifeSci Biotech
Performance |
| Timeline |
| First Trust NYSE |
| Virtus LifeSci Biotech |
First Trust and Virtus LifeSci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Virtus LifeSci
The main advantage of trading using opposite First Trust and Virtus LifeSci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Virtus LifeSci 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 Virtus LifeSci will offset losses from the drop in Virtus LifeSci's long position.| First Trust vs. First Trust Health | First Trust vs. Invesco Dynamic Biotechnology | First Trust vs. VanEck Biotech ETF | First Trust vs. Invesco Dynamic Pharmaceuticals |
| Virtus LifeSci vs. Virtus LifeSci Biotech | Virtus LifeSci vs. ALPS Medical Breakthroughs | Virtus LifeSci vs. Loncar Cancer Immunotherapy | Virtus LifeSci vs. First Trust NYSE |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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