Correlation Between Vanguard Health and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Health 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 Vanguard Health and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Health Care and First Trust Nasdaq, you can compare the effects of market volatilities on Vanguard Health 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 Vanguard Health with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and First Trust.
Diversification Opportunities for Vanguard Health and First Trust
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and First is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq and Vanguard Health 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 Vanguard Health Care 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 Vanguard Health i.e., Vanguard Health and First Trust go up and down completely randomly.
Pair Corralation between Vanguard Health and First Trust
Considering the 90-day investment horizon Vanguard Health Care is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Health Care is 3.25 times less risky than First Trust. The etf trades about -0.15 of its potential returns per unit of risk. The First Trust Nasdaq is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,092 in First Trust Nasdaq on August 27, 2024 and sell it today you would earn a total of 391.00 from holding First Trust Nasdaq or generate 12.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Health Care vs. First Trust Nasdaq
Performance |
| Timeline |
| Vanguard Health Care |
| First Trust Nasdaq |
Vanguard Health and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and First Trust
The main advantage of trading using opposite Vanguard Health and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health 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.| Vanguard Health vs. Vanguard Consumer Staples | Vanguard Health vs. Vanguard Financials Index | Vanguard Health vs. Vanguard Information Technology | Vanguard Health vs. Vanguard Consumer Discretionary |
| First Trust vs. First Trust NASDAQ | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. Invesco KBW Regional |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges |