Correlation Between VanEck Agribusiness and First Trust
Can any of the company-specific risk be diversified away by investing in both VanEck Agribusiness 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 Agribusiness 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 Agribusiness ETF and First Trust Materials, you can compare the effects of market volatilities on VanEck Agribusiness 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 Agribusiness with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Agribusiness and First Trust.
Diversification Opportunities for VanEck Agribusiness and First Trust
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VanEck and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Agribusiness ETF and First Trust Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Materials and VanEck Agribusiness 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 Agribusiness ETF 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 Materials has no effect on the direction of VanEck Agribusiness i.e., VanEck Agribusiness and First Trust go up and down completely randomly.
Pair Corralation between VanEck Agribusiness and First Trust
Considering the 90-day investment horizon VanEck Agribusiness ETF is expected to generate 0.71 times more return on investment than First Trust. However, VanEck Agribusiness ETF is 1.41 times less risky than First Trust. It trades about -0.04 of its potential returns per unit of risk. First Trust Materials is currently generating about -0.11 per unit of risk. If you would invest 6,969 in VanEck Agribusiness ETF on October 24, 2024 and sell it today you would lose (145.00) from holding VanEck Agribusiness ETF or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Agribusiness ETF vs. First Trust Materials
Performance |
| Timeline |
| VanEck Agribusiness ETF |
| First Trust Materials |
VanEck Agribusiness and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Agribusiness and First Trust
The main advantage of trading using opposite VanEck Agribusiness and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Agribusiness 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 Agribusiness vs. Invesco DB Agriculture | VanEck Agribusiness vs. Invesco DB Commodity | VanEck Agribusiness vs. VanEck Steel ETF | VanEck Agribusiness vs. SPDR SP Metals |
| First Trust vs. First Trust IndustrialsProducer | First Trust vs. First Trust Consumer | First Trust vs. First Trust Financials | First Trust vs. First Trust Energy |
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.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |