Correlation Between Vanguard Total and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Total 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 Total Corporate and First Trust Exchange Traded, you can compare the effects of market volatilities on Vanguard Total 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 Total with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and First Trust.
Diversification Opportunities for Vanguard Total 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 Total Corporate 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 Total 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 Total Corporate 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 Total i.e., Vanguard Total and First Trust go up and down completely randomly.
Pair Corralation between Vanguard Total and First Trust
Considering the 90-day investment horizon Vanguard Total Corporate is expected to generate 0.91 times more return on investment than First Trust. However, Vanguard Total Corporate is 1.09 times less risky than First Trust. It trades about 0.15 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.06 per unit of risk. If you would invest 7,602 in Vanguard Total Corporate on November 27, 2024 and sell it today you would earn a total of 68.00 from holding Vanguard Total Corporate or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Corporate vs. First Trust Exchange Traded
Performance |
| Timeline |
| Vanguard Total Corporate |
| First Trust Exchange |
Vanguard Total and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and First Trust
The main advantage of trading using opposite Vanguard Total and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Total vs. Vanguard Total World | Vanguard Total vs. Vanguard Long Term Corporate | Vanguard Total vs. Vanguard Emerging Markets | Vanguard Total vs. Vanguard Mortgage Backed Securities |
| First Trust vs. VanEck Vectors Moodys | First Trust vs. Valued Advisers Trust | First Trust vs. Xtrackers California Municipal | First Trust vs. Principal Exchange Traded Funds |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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