Correlation Between Vanguard Growth and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth 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 Growth 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 Growth Index and First Trust Expanded, you can compare the effects of market volatilities on Vanguard Growth 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 Growth with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and First Trust.
Diversification Opportunities for Vanguard Growth and First Trust
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and First Trust Expanded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Expanded and Vanguard Growth 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 Growth 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 Expanded has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and First Trust go up and down completely randomly.
Pair Corralation between Vanguard Growth and First Trust
Considering the 90-day investment horizon Vanguard Growth Index is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Growth Index is 1.08 times less risky than First Trust. The etf trades about -0.02 of its potential returns per unit of risk. The First Trust Expanded is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,099 in First Trust Expanded on November 5, 2024 and sell it today you would earn a total of 72.00 from holding First Trust Expanded or generate 2.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. First Trust Expanded
Performance |
| Timeline |
| Vanguard Growth Index |
| First Trust Expanded |
Vanguard Growth and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and First Trust
The main advantage of trading using opposite Vanguard Growth and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth 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 Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |