Correlation Between Vanguard Core and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Core 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 Core 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 Core Plus and First Trust TCW, you can compare the effects of market volatilities on Vanguard Core 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 Core with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Core and First Trust.
Diversification Opportunities for Vanguard Core and First Trust
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Core Plus and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and Vanguard Core 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 Core Plus 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 TCW has no effect on the direction of Vanguard Core i.e., Vanguard Core and First Trust go up and down completely randomly.
Pair Corralation between Vanguard Core and First Trust
Given the investment horizon of 90 days Vanguard Core Plus is expected to generate 0.77 times more return on investment than First Trust. However, Vanguard Core Plus is 1.3 times less risky than First Trust. It trades about -0.01 of its potential returns per unit of risk. First Trust TCW is currently generating about -0.06 per unit of risk. If you would invest 7,701 in Vanguard Core Plus on September 19, 2024 and sell it today you would lose (9.00) from holding Vanguard Core Plus or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Core Plus vs. First Trust TCW
Performance |
| Timeline |
| Vanguard Core Plus |
| First Trust TCW |
Vanguard Core and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Core and First Trust
The main advantage of trading using opposite Vanguard Core and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Core 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 Core vs. First Trust TCW | Vanguard Core vs. SPDR DoubleLine Total | Vanguard Core vs. Vident Core Bond |
| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Tactical | First Trust vs. First Trust Managed |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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