Correlation Between First Trust and Vulcan Value
Can any of the company-specific risk be diversified away by investing in both First Trust and Vulcan Value 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 Vulcan Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Lunt and Vulcan Value Partners, you can compare the effects of market volatilities on First Trust and Vulcan Value 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 Vulcan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Vulcan Value.
Diversification Opportunities for First Trust and Vulcan Value
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Vulcan is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Lunt and Vulcan Value Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Value Partners 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 Lunt are associated (or correlated) with Vulcan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Value Partners has no effect on the direction of First Trust i.e., First Trust and Vulcan Value go up and down completely randomly.
Pair Corralation between First Trust and Vulcan Value
Given the investment horizon of 90 days First Trust Lunt is expected to generate about the same return on investment as Vulcan Value Partners. But, First Trust Lunt is 1.07 times less risky than Vulcan Value. It trades about 0.05 of its potential returns per unit of risk. Vulcan Value Partners is currently generating about 0.04 per unit of risk. If you would invest 1,045 in Vulcan Value Partners on September 4, 2024 and sell it today you would earn a total of 243.00 from holding Vulcan Value Partners or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Lunt vs. Vulcan Value Partners
Performance |
| Timeline |
| First Trust Lunt |
| Vulcan Value Partners |
First Trust and Vulcan Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Vulcan Value
The main advantage of trading using opposite First Trust and Vulcan Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Vulcan Value 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 Vulcan Value will offset losses from the drop in Vulcan Value's long position.| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. JPMorgan Fundamental Data |
| Vulcan Value vs. Vulcan Value Partners | Vulcan Value vs. Vulcan Value Partners | Vulcan Value vs. Vulcan Value Partners | Vulcan Value vs. Saba Capital Income |
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.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |