Correlation Between First Trust and VanEck Short
Can any of the company-specific risk be diversified away by investing in both First Trust and VanEck Short 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 VanEck Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Flexible and VanEck Short Muni, you can compare the effects of market volatilities on First Trust and VanEck Short 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 VanEck Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and VanEck Short.
Diversification Opportunities for First Trust and VanEck Short
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and VanEck is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Flexible and VanEck Short Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Short Muni 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 Flexible are associated (or correlated) with VanEck Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Short Muni has no effect on the direction of First Trust i.e., First Trust and VanEck Short go up and down completely randomly.
Pair Corralation between First Trust and VanEck Short
Given the investment horizon of 90 days First Trust is expected to generate 1.19 times less return on investment than VanEck Short. In addition to that, First Trust is 4.05 times more volatile than VanEck Short Muni. It trades about 0.04 of its total potential returns per unit of risk. VanEck Short Muni is currently generating about 0.2 per unit of volatility. If you would invest 1,712 in VanEck Short Muni on August 29, 2024 and sell it today you would earn a total of 10.00 from holding VanEck Short Muni or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Flexible vs. VanEck Short Muni
Performance |
| Timeline |
| First Trust Flexible |
| VanEck Short Muni |
First Trust and VanEck Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and VanEck Short
The main advantage of trading using opposite First Trust and VanEck Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, VanEck Short 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 VanEck Short will offset losses from the drop in VanEck Short's long position.| First Trust vs. Fundamental Income Net | First Trust vs. TTM Technologies | First Trust vs. DXP Enterprises | First Trust vs. Citi Trends |
| VanEck Short vs. SSGA Active Trust | VanEck Short vs. SPDR Nuveen Municipal | VanEck Short vs. iShares Short Maturity | VanEck Short vs. First Trust Flexible |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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