Correlation Between First Trust and VanEck JP
Can any of the company-specific risk be diversified away by investing in both First Trust and VanEck JP 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 JP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust BuyWrite and VanEck JP Morgan, you can compare the effects of market volatilities on First Trust and VanEck JP 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 JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and VanEck JP.
Diversification Opportunities for First Trust and VanEck JP
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and VanEck is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Trust BuyWrite and VanEck JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck JP Morgan 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 BuyWrite are associated (or correlated) with VanEck JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck JP Morgan has no effect on the direction of First Trust i.e., First Trust and VanEck JP go up and down completely randomly.
Pair Corralation between First Trust and VanEck JP
Given the investment horizon of 90 days First Trust BuyWrite is expected to generate 1.09 times more return on investment than VanEck JP. However, First Trust is 1.09 times more volatile than VanEck JP Morgan. It trades about 0.16 of its potential returns per unit of risk. VanEck JP Morgan is currently generating about 0.02 per unit of risk. If you would invest 1,951 in First Trust BuyWrite on September 2, 2024 and sell it today you would earn a total of 432.00 from holding First Trust BuyWrite or generate 22.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust BuyWrite vs. VanEck JP Morgan
Performance |
| Timeline |
| First Trust BuyWrite |
| VanEck JP Morgan |
First Trust and VanEck JP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and VanEck JP
The main advantage of trading using opposite First Trust and VanEck JP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, VanEck JP 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 JP will offset losses from the drop in VanEck JP's long position.| First Trust vs. First Trust Emerging | First Trust vs. First Trust Managed | First Trust vs. First Trust Senior | First Trust vs. First Trust Income |
| VanEck JP vs. Invesco Emerging Markets | VanEck JP vs. PIMCO 15 Year | VanEck JP vs. SPDR Bloomberg Emerging | VanEck JP vs. iShares JP Morgan |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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