Correlation Between First Trust and VCLO
Can any of the company-specific risk be diversified away by investing in both First Trust and VCLO 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 VCLO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dow and VCLO, you can compare the effects of market volatilities on First Trust and VCLO 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 VCLO. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and VCLO.
Diversification Opportunities for First Trust and VCLO
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and VCLO is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dow and VCLO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VCLO 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 Dow are associated (or correlated) with VCLO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VCLO has no effect on the direction of First Trust i.e., First Trust and VCLO go up and down completely randomly.
Pair Corralation between First Trust and VCLO
Considering the 90-day investment horizon First Trust Dow is expected to generate 0.7 times more return on investment than VCLO. However, First Trust Dow is 1.43 times less risky than VCLO. It trades about 0.1 of its potential returns per unit of risk. VCLO is currently generating about -0.06 per unit of risk. If you would invest 12,834 in First Trust Dow on August 26, 2024 and sell it today you would earn a total of 11,232 from holding First Trust Dow or generate 87.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 22.33% |
| Values | Daily Returns |
First Trust Dow vs. VCLO
Performance |
| Timeline |
| First Trust Dow |
| VCLO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and VCLO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and VCLO
The main advantage of trading using opposite First Trust and VCLO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, VCLO 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 VCLO will offset losses from the drop in VCLO's long position.| First Trust vs. First Trust Cloud | First Trust vs. iShares Expanded Tech Software | First Trust vs. Invesco NASDAQ Internet | First Trust vs. First Trust NASDAQ 100 Technology |
| VCLO vs. FT Vest Equity | VCLO vs. Zillow Group Class | VCLO vs. Northern Lights | VCLO vs. VanEck Vectors Moodys |
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 CEOs Directory module to screen CEOs from public companies around the world.
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