Correlation Between VictoryShares Multi and First Trust
Can any of the company-specific risk be diversified away by investing in both VictoryShares Multi 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 VictoryShares Multi and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VictoryShares Multi Factor Minimum and First Trust NASDAQ 100, you can compare the effects of market volatilities on VictoryShares Multi 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 VictoryShares Multi with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares Multi and First Trust.
Diversification Opportunities for VictoryShares Multi and First Trust
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VictoryShares and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares Multi Factor Min 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 VictoryShares Multi 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 VictoryShares Multi Factor Minimum 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 VictoryShares Multi i.e., VictoryShares Multi and First Trust go up and down completely randomly.
Pair Corralation between VictoryShares Multi and First Trust
Given the investment horizon of 90 days VictoryShares Multi is expected to generate 1.03 times less return on investment than First Trust. But when comparing it to its historical volatility, VictoryShares Multi Factor Minimum is 1.08 times less risky than First Trust. It trades about 0.38 of its potential returns per unit of risk. First Trust NASDAQ 100 is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 9,287 in First Trust NASDAQ 100 on September 1, 2024 and sell it today you would earn a total of 588.00 from holding First Trust NASDAQ 100 or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
VictoryShares Multi Factor Min vs. First Trust NASDAQ 100
Performance |
| Timeline |
| VictoryShares Multi |
| First Trust NASDAQ |
VictoryShares Multi and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VictoryShares Multi and First Trust
The main advantage of trading using opposite VictoryShares Multi and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares Multi 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.| VictoryShares Multi vs. iShares Core SP | VictoryShares Multi vs. iShares Core MSCI | VictoryShares Multi vs. iShares Broad USD | VictoryShares Multi 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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