Correlation Between First Trust and VanEck Robotics
Can any of the company-specific risk be diversified away by investing in both First Trust and VanEck Robotics 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 Robotics 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 VanEck Robotics ETF, you can compare the effects of market volatilities on First Trust and VanEck Robotics 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 Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and VanEck Robotics.
Diversification Opportunities for First Trust and VanEck Robotics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and VanEck is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and VanEck Robotics ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Robotics ETF 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 VanEck Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Robotics ETF has no effect on the direction of First Trust i.e., First Trust and VanEck Robotics go up and down completely randomly.
Pair Corralation between First Trust and VanEck Robotics
Given the investment horizon of 90 days First Trust Nasdaq is expected to generate 1.41 times more return on investment than VanEck Robotics. However, First Trust is 1.41 times more volatile than VanEck Robotics ETF. It trades about 0.17 of its potential returns per unit of risk. VanEck Robotics ETF is currently generating about -0.03 per unit of risk. If you would invest 4,421 in First Trust Nasdaq on August 31, 2024 and sell it today you would earn a total of 245.00 from holding First Trust Nasdaq or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Nasdaq vs. VanEck Robotics ETF
Performance |
| Timeline |
| First Trust Nasdaq |
| VanEck Robotics ETF |
First Trust and VanEck Robotics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and VanEck Robotics
The main advantage of trading using opposite First Trust and VanEck Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, VanEck Robotics 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 Robotics will offset losses from the drop in VanEck Robotics' long position.| First Trust vs. Nexalin Technology | First Trust vs. Kilroy Realty Corp | First Trust vs. Highwoods Properties | First Trust vs. Karat Packaging |
| VanEck Robotics vs. Nexalin Technology | VanEck Robotics vs. Kilroy Realty Corp | VanEck Robotics vs. Highwoods Properties | VanEck Robotics vs. Karat Packaging |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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