Correlation Between MKAM ETF and FT Vest
Can any of the company-specific risk be diversified away by investing in both MKAM ETF and FT Vest 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 MKAM ETF and FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MKAM ETF and FT Vest Equity, you can compare the effects of market volatilities on MKAM ETF and FT Vest 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 MKAM ETF with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKAM ETF and FT Vest.
Diversification Opportunities for MKAM ETF and FT Vest
Very good diversification
The 3 months correlation between MKAM and DHDG is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MKAM ETF and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity and MKAM ETF 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 MKAM ETF are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of MKAM ETF i.e., MKAM ETF and FT Vest go up and down completely randomly.
Pair Corralation between MKAM ETF and FT Vest
Given the investment horizon of 90 days MKAM ETF is expected to generate 1.12 times less return on investment than FT Vest. But when comparing it to its historical volatility, MKAM ETF is 1.0 times less risky than FT Vest. It trades about 0.36 of its potential returns per unit of risk. FT Vest Equity is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 3,005 in FT Vest Equity on September 1, 2024 and sell it today you would earn a total of 98.00 from holding FT Vest Equity or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MKAM ETF vs. FT Vest Equity
Performance |
| Timeline |
| MKAM ETF |
| FT Vest Equity |
MKAM ETF and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MKAM ETF and FT Vest
The main advantage of trading using opposite MKAM ETF and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MKAM ETF position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| MKAM ETF vs. FT Vest Equity | MKAM ETF vs. Northern Lights | MKAM ETF vs. Dimensional International High | MKAM ETF vs. Matthews China Discovery |
| FT Vest vs. Vanguard Total Stock | FT Vest vs. SPDR SP 500 | FT Vest vs. iShares Core SP | FT Vest vs. Vanguard Total Bond |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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