Correlation Between Van Eck and First Trust
Can any of the company-specific risk be diversified away by investing in both Van Eck 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 Van Eck and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Van Eck and First Trust Global, you can compare the effects of market volatilities on Van Eck 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 Van Eck with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Van Eck and First Trust.
Diversification Opportunities for Van Eck and First Trust
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Van and First is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Van Eck and First Trust Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Global and Van Eck 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 Van Eck 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 Global has no effect on the direction of Van Eck i.e., Van Eck and First Trust go up and down completely randomly.
Pair Corralation between Van Eck and First Trust
Considering the 90-day investment horizon Van Eck is expected to generate 0.33 times more return on investment than First Trust. However, Van Eck is 3.03 times less risky than First Trust. It trades about 0.14 of its potential returns per unit of risk. First Trust Global is currently generating about 0.03 per unit of risk. If you would invest 2,473 in Van Eck on September 2, 2024 and sell it today you would earn a total of 294.00 from holding Van Eck or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 86.29% |
| Values | Daily Returns |
Van Eck vs. First Trust Global
Performance |
| Timeline |
| Van Eck |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| First Trust Global |
Van Eck and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Van Eck and First Trust
The main advantage of trading using opposite Van Eck and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Van Eck 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.| Van Eck vs. PIMCO Investment Grade | Van Eck vs. Direxion Auspice Broad | Van Eck vs. Sprott Focus Trust | Van Eck vs. Simplify Exchange Traded |
| First Trust vs. Invesco Global Clean | First Trust vs. Invesco Solar ETF | First Trust vs. First Trust NASDAQ | First Trust vs. Invesco WilderHill Clean |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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