Correlation Between VanEck Intermediate and First Trust
Can any of the company-specific risk be diversified away by investing in both VanEck Intermediate 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 Intermediate 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 Intermediate Muni and First Trust Managed, you can compare the effects of market volatilities on VanEck Intermediate 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 Intermediate with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Intermediate and First Trust.
Diversification Opportunities for VanEck Intermediate and First Trust
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Intermediate Muni and First Trust Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Managed and VanEck Intermediate 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 Intermediate Muni 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 Managed has no effect on the direction of VanEck Intermediate i.e., VanEck Intermediate and First Trust go up and down completely randomly.
Pair Corralation between VanEck Intermediate and First Trust
Considering the 90-day investment horizon VanEck Intermediate Muni is expected to generate 1.05 times more return on investment than First Trust. However, VanEck Intermediate is 1.05 times more volatile than First Trust Managed. It trades about 0.14 of its potential returns per unit of risk. First Trust Managed is currently generating about 0.13 per unit of risk. If you would invest 4,596 in VanEck Intermediate Muni on August 30, 2024 and sell it today you would earn a total of 51.00 from holding VanEck Intermediate Muni or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
VanEck Intermediate Muni vs. First Trust Managed
Performance |
| Timeline |
| VanEck Intermediate Muni |
| First Trust Managed |
VanEck Intermediate and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Intermediate and First Trust
The main advantage of trading using opposite VanEck Intermediate and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Intermediate 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 Intermediate vs. VanEck Long Muni | VanEck Intermediate vs. VanEck Short Muni | VanEck Intermediate vs. SPDR Nuveen Bloomberg | VanEck Intermediate vs. Invesco National AMT Free |
| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Senior | First Trust vs. First Trust TCW |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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