Correlation Between Vanguard Value and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Value 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 Value 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 Value Index and First Trust Capital, you can compare the effects of market volatilities on Vanguard Value 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 Value with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and First Trust.
Diversification Opportunities for Vanguard Value and First Trust
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and First Trust Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Capital and Vanguard Value 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 Value Index 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 Capital has no effect on the direction of Vanguard Value i.e., Vanguard Value and First Trust go up and down completely randomly.
Pair Corralation between Vanguard Value and First Trust
Considering the 90-day investment horizon Vanguard Value Index is expected to generate 1.24 times more return on investment than First Trust. However, Vanguard Value is 1.24 times more volatile than First Trust Capital. It trades about 0.21 of its potential returns per unit of risk. First Trust Capital is currently generating about 0.15 per unit of risk. If you would invest 17,363 in Vanguard Value Index on August 26, 2024 and sell it today you would earn a total of 645.00 from holding Vanguard Value Index or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Index vs. First Trust Capital
Performance |
| Timeline |
| Vanguard Value Index |
| First Trust Capital |
Vanguard Value and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and First Trust
The main advantage of trading using opposite Vanguard Value and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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 Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
| First Trust vs. BlackRock ETF Trust | First Trust vs. Rbb Fund | First Trust vs. Virtus ETF Trust | First Trust vs. Amplify CWP Enhanced |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |