Correlation Between VictoryShares USAA and First Trust
Can any of the company-specific risk be diversified away by investing in both VictoryShares USAA 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 VictoryShares USAA and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VictoryShares USAA Core and First Trust Low, you can compare the effects of market volatilities on VictoryShares USAA 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 VictoryShares USAA with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares USAA and First Trust.
Diversification Opportunities for VictoryShares USAA and First Trust
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VictoryShares and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares USAA Core and First Trust Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Low and VictoryShares USAA 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 VictoryShares USAA Core 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 Low has no effect on the direction of VictoryShares USAA i.e., VictoryShares USAA and First Trust go up and down completely randomly.
Pair Corralation between VictoryShares USAA and First Trust
Given the investment horizon of 90 days VictoryShares USAA Core is expected to under-perform the First Trust. In addition to that, VictoryShares USAA is 1.87 times more volatile than First Trust Low. It trades about -0.26 of its total potential returns per unit of risk. First Trust Low is currently generating about -0.11 per unit of volatility. If you would invest 1,881 in First Trust Low on September 24, 2024 and sell it today you would lose (6.00) from holding First Trust Low or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VictoryShares USAA Core vs. First Trust Low
Performance |
| Timeline |
| VictoryShares USAA Core |
| First Trust Low |
VictoryShares USAA and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VictoryShares USAA and First Trust
The main advantage of trading using opposite VictoryShares USAA and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares USAA 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.| VictoryShares USAA vs. First Trust Low | VictoryShares USAA vs. Janus Henderson Mortgage Backed | VictoryShares USAA vs. Aquagold International | VictoryShares USAA vs. Morningstar Unconstrained Allocation |
| First Trust vs. Vanguard Short Term Bond | First Trust vs. iShares 1 5 Year | First Trust vs. SPDR Barclays Short | First Trust vs. iShares Core 1 5 |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |