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 2000 and First Trust Multi Manager, 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
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 2000 and First Trust Multi Manager in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi 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 2000 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 Multi 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
Given the investment horizon of 90 days Vanguard Russell 2000 is expected to generate 1.09 times more return on investment than First Trust. However, Vanguard Russell is 1.09 times more volatile than First Trust Multi Manager. It trades about 0.08 of its potential returns per unit of risk. First Trust Multi Manager is currently generating about 0.09 per unit of risk. If you would invest 13,494 in Vanguard Russell 2000 on August 24, 2024 and sell it today you would earn a total of 1,982 from holding Vanguard Russell 2000 or generate 14.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Russell 2000 vs. First Trust Multi Manager
Performance |
| Timeline |
| Vanguard Russell 2000 |
| First Trust Multi |
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 Small Cap Value | Vanguard Russell vs. iShares Russell 2000 | Vanguard Russell vs. Dimensional Targeted Value | Vanguard Russell vs. SPDR SP 600 |
| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Active | First Trust vs. First Trust Expanded |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |