Correlation Between First Trust and Vanguard Mid
Can any of the company-specific risk be diversified away by investing in both First Trust and Vanguard Mid 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 Vanguard Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Mid and Vanguard Mid Cap Growth, you can compare the effects of market volatilities on First Trust and Vanguard Mid 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 Vanguard Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Vanguard Mid.
Diversification Opportunities for First Trust and Vanguard Mid
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mid and Vanguard Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Mid are associated (or correlated) with Vanguard Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of First Trust i.e., First Trust and Vanguard Mid go up and down completely randomly.
Pair Corralation between First Trust and Vanguard Mid
Considering the 90-day investment horizon First Trust Mid is expected to generate 1.21 times more return on investment than Vanguard Mid. However, First Trust is 1.21 times more volatile than Vanguard Mid Cap Growth. It trades about 0.07 of its potential returns per unit of risk. Vanguard Mid Cap Growth is currently generating about 0.08 per unit of risk. If you would invest 6,584 in First Trust Mid on September 12, 2024 and sell it today you would earn a total of 1,927 from holding First Trust Mid or generate 29.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Mid vs. Vanguard Mid Cap Growth
Performance |
| Timeline |
| First Trust Mid |
| Vanguard Mid Cap |
First Trust and Vanguard Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Vanguard Mid
The main advantage of trading using opposite First Trust and Vanguard Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Vanguard Mid 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 Vanguard Mid will offset losses from the drop in Vanguard Mid's long position.| First Trust vs. Vanguard Mid Cap Growth | First Trust vs. iShares Russell Mid Cap | First Trust vs. ARK Innovation ETF | First Trust vs. iShares SP Mid Cap |
| Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Mid Cap Value | Vanguard Mid vs. Vanguard Small Cap Value | Vanguard Mid vs. Vanguard Mid Cap Index |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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