Correlation Between Vanguard Industrials and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Industrials 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 Industrials 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 Industrials Index and First Trust Exchange Traded, you can compare the effects of market volatilities on Vanguard Industrials 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 Industrials with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Industrials and First Trust.
Diversification Opportunities for Vanguard Industrials and First Trust
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Industrials Index and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and Vanguard Industrials 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 Industrials Index 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 Exchange has no effect on the direction of Vanguard Industrials i.e., Vanguard Industrials and First Trust go up and down completely randomly.
Pair Corralation between Vanguard Industrials and First Trust
Considering the 90-day investment horizon Vanguard Industrials is expected to generate 1.06 times less return on investment than First Trust. In addition to that, Vanguard Industrials is 1.22 times more volatile than First Trust Exchange Traded. It trades about 0.18 of its total potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.23 per unit of volatility. If you would invest 6,702 in First Trust Exchange Traded on August 26, 2024 and sell it today you would earn a total of 549.00 from holding First Trust Exchange Traded or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Industrials Index vs. First Trust Exchange Traded
Performance |
| Timeline |
| Vanguard Industrials |
| First Trust Exchange |
Vanguard Industrials and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Industrials and First Trust
The main advantage of trading using opposite Vanguard Industrials and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Industrials 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 Industrials vs. Gabelli ETFs Trust | Vanguard Industrials vs. First Trust Exchange Traded | Vanguard Industrials vs. Northern Lights | Vanguard Industrials vs. First Trust Exchange Traded |
| First Trust vs. Franklin Core Dividend | First Trust vs. WisdomTree Trust | First Trust vs. Invesco SP MidCap |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |