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 NASDAQ 100, 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
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VictoryShares and First is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares USAA Core and First Trust NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NASDAQ 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 NASDAQ 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 is expected to generate 6.64 times less return on investment than First Trust. But when comparing it to its historical volatility, VictoryShares USAA Core is 2.01 times less risky than First Trust. It trades about 0.11 of its potential returns per unit of risk. First Trust NASDAQ 100 is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 9,287 in First Trust NASDAQ 100 on September 1, 2024 and sell it today you would earn a total of 588.00 from holding First Trust NASDAQ 100 or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VictoryShares USAA Core vs. First Trust NASDAQ 100
Performance |
| Timeline |
| VictoryShares USAA Core |
| First Trust NASDAQ |
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. VictoryShares USAA Core | VictoryShares USAA vs. VictoryShares International Value | VictoryShares USAA vs. VictoryShares Small Mid | VictoryShares USAA vs. VictoryShares Value Momentum |
| First Trust vs. First Trust NASDAQ 100 | First Trust vs. First Trust Multi | First Trust vs. First Trust Large | First Trust vs. First Trust Large |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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