Correlation Between First Trust and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both First Trust and Vanguard FTSE 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 Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Nasdaq and Vanguard FTSE Developed, you can compare the effects of market volatilities on First Trust and Vanguard FTSE 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 Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Vanguard FTSE.
Diversification Opportunities for First Trust and Vanguard FTSE
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Vanguard is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed 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 Nasdaq are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of First Trust i.e., First Trust and Vanguard FTSE go up and down completely randomly.
Pair Corralation between First Trust and Vanguard FTSE
Assuming the 90 days trading horizon First Trust Nasdaq is expected to under-perform the Vanguard FTSE. In addition to that, First Trust is 3.49 times more volatile than Vanguard FTSE Developed. It trades about -0.02 of its total potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.04 per unit of volatility. If you would invest 4,210 in Vanguard FTSE Developed on August 31, 2024 and sell it today you would earn a total of 559.00 from holding Vanguard FTSE Developed or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
First Trust Nasdaq vs. Vanguard FTSE Developed
Performance |
| Timeline |
| First Trust Nasdaq |
| Vanguard FTSE Developed |
First Trust and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Vanguard FTSE
The main advantage of trading using opposite First Trust and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Vanguard FTSE 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 Vanguard FTSE will offset losses from the drop in Vanguard FTSE's long position.| First Trust vs. Leverage Shares 3x | First Trust vs. WisdomTree Natural Gas | First Trust vs. GraniteShares 3x Short | First Trust vs. Leverage Shares 3x |
| Vanguard FTSE vs. Vanguard USD Corporate | Vanguard FTSE vs. Vanguard Global Aggregate | Vanguard FTSE vs. Vanguard USD Corporate | Vanguard FTSE vs. Vanguard FTSE All World |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |