Correlation Between Vanguard Specialized and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Specialized 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 Specialized 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 Specialized Funds and First Trust Developed, you can compare the effects of market volatilities on Vanguard Specialized 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 Specialized with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Specialized and First Trust.
Diversification Opportunities for Vanguard Specialized and First Trust
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and First is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Specialized Funds and First Trust Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Developed and Vanguard Specialized 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 Specialized Funds 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 Developed has no effect on the direction of Vanguard Specialized i.e., Vanguard Specialized and First Trust go up and down completely randomly.
Pair Corralation between Vanguard Specialized and First Trust
Assuming the 90 days trading horizon Vanguard Specialized Funds is expected to generate 1.06 times more return on investment than First Trust. However, Vanguard Specialized is 1.06 times more volatile than First Trust Developed. It trades about 0.03 of its potential returns per unit of risk. First Trust Developed is currently generating about -0.03 per unit of risk. If you would invest 151,319 in Vanguard Specialized Funds on September 22, 2024 and sell it today you would earn a total of 28,281 from holding Vanguard Specialized Funds or generate 18.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vanguard Specialized Funds vs. First Trust Developed
Performance |
| Timeline |
| Vanguard Specialized |
| First Trust Developed |
Vanguard Specialized and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Specialized and First Trust
The main advantage of trading using opposite Vanguard Specialized and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Specialized 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 Specialized vs. iShares Core SP | Vanguard Specialized vs. Vanguard World | Vanguard Specialized vs. The Select Sector | Vanguard Specialized vs. SPDR Series Trust |
| First Trust vs. Vanguard Index Funds | First Trust vs. Vanguard Index Funds | First Trust vs. Vanguard STAR Funds | First Trust vs. SPDR SP 500 |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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