Correlation Between VanEck Vectors and First Trust
Can any of the company-specific risk be diversified away by investing in both VanEck Vectors 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 Vectors 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 Vectors Moodys and First Trust Dow, you can compare the effects of market volatilities on VanEck Vectors 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 Vectors with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Vectors and First Trust.
Diversification Opportunities for VanEck Vectors and First Trust
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VanEck and First is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors Moodys and First Trust Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dow and VanEck Vectors 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 Vectors Moodys 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 Dow has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and First Trust go up and down completely randomly.
Pair Corralation between VanEck Vectors and First Trust
Given the investment horizon of 90 days VanEck Vectors is expected to generate 5.64 times less return on investment than First Trust. But when comparing it to its historical volatility, VanEck Vectors Moodys is 3.36 times less risky than First Trust. It trades about 0.06 of its potential returns per unit of risk. First Trust Dow is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12,526 in First Trust Dow on August 27, 2024 and sell it today you would earn a total of 11,540 from holding First Trust Dow or generate 92.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Vectors Moodys vs. First Trust Dow
Performance |
| Timeline |
| VanEck Vectors Moodys |
| First Trust Dow |
VanEck Vectors and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Vectors and First Trust
The main advantage of trading using opposite VanEck Vectors and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Vectors 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 Vectors vs. iShares iBonds 2026 | VanEck Vectors vs. iShares BBB Rated | VanEck Vectors vs. iShares iBonds Dec | VanEck Vectors vs. iShares 25 Year |
| First Trust vs. First Trust Cloud | First Trust vs. iShares Expanded Tech Software | First Trust vs. Invesco NASDAQ Internet | First Trust vs. First Trust NASDAQ 100 Technology |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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