Correlation Between First Trust and VanEck Intermediate
Can any of the company-specific risk be diversified away by investing in both First Trust and VanEck Intermediate 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 VanEck Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Managed and VanEck Intermediate Muni, you can compare the effects of market volatilities on First Trust and VanEck Intermediate 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 VanEck Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and VanEck Intermediate.
Diversification Opportunities for First Trust and VanEck Intermediate
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and VanEck is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed and VanEck Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Intermediate Muni 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 Managed are associated (or correlated) with VanEck Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Intermediate Muni has no effect on the direction of First Trust i.e., First Trust and VanEck Intermediate go up and down completely randomly.
Pair Corralation between First Trust and VanEck Intermediate
Considering the 90-day investment horizon First Trust Managed is expected to generate 0.83 times more return on investment than VanEck Intermediate. However, First Trust Managed is 1.2 times less risky than VanEck Intermediate. It trades about 0.04 of its potential returns per unit of risk. VanEck Intermediate Muni is currently generating about -0.1 per unit of risk. If you would invest 5,096 in First Trust Managed on November 3, 2024 and sell it today you would earn a total of 8.00 from holding First Trust Managed or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Managed vs. VanEck Intermediate Muni
Performance |
| Timeline |
| First Trust Managed |
| VanEck Intermediate Muni |
First Trust and VanEck Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and VanEck Intermediate
The main advantage of trading using opposite First Trust and VanEck Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, VanEck Intermediate 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 VanEck Intermediate will offset losses from the drop in VanEck Intermediate's long position.| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Senior | First Trust vs. First Trust TCW |
| VanEck Intermediate vs. VanEck Long Muni | VanEck Intermediate vs. VanEck Short Muni | VanEck Intermediate vs. SPDR Nuveen Bloomberg | VanEck Intermediate vs. Invesco National AMT Free |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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