Correlation Between First Trust/confluence and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both First Trust/confluence and Vanguard Small-cap 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/confluence and Vanguard Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trustconfluence Small and Vanguard Small Cap Index, you can compare the effects of market volatilities on First Trust/confluence and Vanguard Small-cap 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/confluence with a short position of Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust/confluence and Vanguard Small-cap.
Diversification Opportunities for First Trust/confluence and Vanguard Small-cap
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Vanguard is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Trustconfluence Small and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and First Trust/confluence 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 Trustconfluence Small are associated (or correlated) with Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of First Trust/confluence i.e., First Trust/confluence and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between First Trust/confluence and Vanguard Small-cap
Assuming the 90 days horizon First Trust/confluence is expected to generate 9.47 times less return on investment than Vanguard Small-cap. In addition to that, First Trust/confluence is 1.08 times more volatile than Vanguard Small Cap Index. It trades about 0.01 of its total potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.07 per unit of volatility. If you would invest 8,889 in Vanguard Small Cap Index on September 3, 2024 and sell it today you would earn a total of 3,585 from holding Vanguard Small Cap Index or generate 40.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trustconfluence Small vs. Vanguard Small Cap Index
Performance |
| Timeline |
| First Trust/confluence |
| Vanguard Small Cap |
First Trust/confluence and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust/confluence and Vanguard Small-cap
The main advantage of trading using opposite First Trust/confluence and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust/confluence position performs unexpectedly, Vanguard Small-cap 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 Small-cap will offset losses from the drop in Vanguard Small-cap's long position.| First Trust/confluence vs. Nuveen Small Cap | First Trust/confluence vs. Emerald Growth Fund | First Trust/confluence vs. Emerald Growth Fund | First Trust/confluence vs. Emerald Growth Fund |
| Vanguard Small-cap vs. Vanguard Mid Cap Index | Vanguard Small-cap vs. Vanguard 500 Index | Vanguard Small-cap vs. Vanguard Emerging Markets | Vanguard Small-cap vs. Vanguard Reit 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |