Correlation Between VanEck Robotics and First Trust
Can any of the company-specific risk be diversified away by investing in both VanEck Robotics and First Trust 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 VanEck Robotics and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Robotics ETF and First Trust Nasdaq, you can compare the effects of market volatilities on VanEck Robotics and First Trust 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 VanEck Robotics with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Robotics and First Trust.
Diversification Opportunities for VanEck Robotics and First Trust
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VanEck and First is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Robotics ETF and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq and VanEck Robotics 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 VanEck Robotics ETF are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of VanEck Robotics i.e., VanEck Robotics and First Trust go up and down completely randomly.
Pair Corralation between VanEck Robotics and First Trust
Given the investment horizon of 90 days VanEck Robotics is expected to generate 321.0 times less return on investment than First Trust. But when comparing it to its historical volatility, VanEck Robotics ETF is 1.02 times less risky than First Trust. It trades about 0.0 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,249 in First Trust Nasdaq on August 28, 2024 and sell it today you would earn a total of 520.00 from holding First Trust Nasdaq or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Robotics ETF vs. First Trust Nasdaq
Performance |
| Timeline |
| VanEck Robotics ETF |
| First Trust Nasdaq |
VanEck Robotics and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Robotics and First Trust
The main advantage of trading using opposite VanEck Robotics and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Robotics position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| VanEck Robotics vs. First Trust Nasdaq | VanEck Robotics vs. Robo Global Artificial | VanEck Robotics vs. WisdomTree Trust | VanEck Robotics vs. Tidal Trust II |
| First Trust vs. Invesco DWA Utilities | First Trust vs. Invesco Dynamic Large | First Trust vs. Invesco Dynamic Large | First Trust vs. HUMANA INC |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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