Correlation Between First Trust and Vanguard Dividend
Can any of the company-specific risk be diversified away by investing in both First Trust and Vanguard Dividend 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 Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Value and Vanguard Dividend Appreciation, you can compare the effects of market volatilities on First Trust and Vanguard Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Vanguard Dividend.
Diversification Opportunities for First Trust and Vanguard Dividend
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Vanguard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Value and Vanguard Dividend Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Dividend 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 Value are associated (or correlated) with Vanguard Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Dividend has no effect on the direction of First Trust i.e., First Trust and Vanguard Dividend go up and down completely randomly.
Pair Corralation between First Trust and Vanguard Dividend
Assuming the 90 days trading horizon First Trust is expected to generate 2.03 times less return on investment than Vanguard Dividend. In addition to that, First Trust is 1.07 times more volatile than Vanguard Dividend Appreciation. It trades about 0.05 of its total potential returns per unit of risk. Vanguard Dividend Appreciation is currently generating about 0.12 per unit of volatility. If you would invest 6,933 in Vanguard Dividend Appreciation on September 5, 2024 and sell it today you would earn a total of 2,834 from holding Vanguard Dividend Appreciation or generate 40.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Value vs. Vanguard Dividend Appreciation
Performance |
| Timeline |
| First Trust Value |
| Vanguard Dividend |
First Trust and Vanguard Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Vanguard Dividend
The main advantage of trading using opposite First Trust and Vanguard Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Vanguard Dividend 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 Dividend will offset losses from the drop in Vanguard Dividend's long position.| First Trust vs. First Trust Global | First Trust vs. FT AlphaDEX Industrials | First Trust vs. First Trust Senior | First Trust vs. First Trust AlphaDEX |
| Vanguard Dividend vs. iShares Dividend Growers | Vanguard Dividend vs. BMO Dividend ETF | Vanguard Dividend vs. Vanguard Dividend Appreciation | Vanguard Dividend vs. RBC Quant Dividend |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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