Correlation Between Vanguard Russell and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Russell 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 Russell 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 Russell 1000 and First Trust NASDAQ 100, you can compare the effects of market volatilities on Vanguard Russell 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 Russell with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and First Trust.
Diversification Opportunities for Vanguard Russell and First Trust
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 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 Vanguard Russell 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 Russell 1000 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 Russell i.e., Vanguard Russell and First Trust go up and down completely randomly.
Pair Corralation between Vanguard Russell and First Trust
Assuming the 90 days horizon Vanguard Russell 1000 is expected to generate 1.38 times more return on investment than First Trust. However, Vanguard Russell is 1.38 times more volatile than First Trust NASDAQ 100. It trades about 0.11 of its potential returns per unit of risk. First Trust NASDAQ 100 is currently generating about 0.08 per unit of risk. If you would invest 51,725 in Vanguard Russell 1000 on September 1, 2024 and sell it today you would earn a total of 27,135 from holding Vanguard Russell 1000 or generate 52.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Vanguard Russell 1000 vs. First Trust NASDAQ 100
Performance |
| Timeline |
| Vanguard Russell 1000 |
| First Trust NASDAQ |
Vanguard Russell and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Russell and First Trust
The main advantage of trading using opposite Vanguard Russell and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Russell 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 Russell vs. Vanguard Growth Index | Vanguard Russell vs. iShares Russell 1000 | Vanguard Russell vs. iShares SP 500 | Vanguard Russell vs. iShares Core SP |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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