Correlation Between Vanguard FTSE and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE 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 FTSE 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 FTSE Emerging and First Trust Exchange, you can compare the effects of market volatilities on Vanguard FTSE 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 FTSE with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and First Trust.
Diversification Opportunities for Vanguard FTSE and First Trust
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and First is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Emerging and First Trust Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and Vanguard FTSE 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 FTSE Emerging 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 FTSE i.e., Vanguard FTSE and First Trust go up and down completely randomly.
Pair Corralation between Vanguard FTSE and First Trust
Considering the 90-day investment horizon Vanguard FTSE is expected to generate 1.39 times less return on investment than First Trust. In addition to that, Vanguard FTSE is 5.74 times more volatile than First Trust Exchange. It trades about 0.02 of its total potential returns per unit of risk. First Trust Exchange is currently generating about 0.2 per unit of volatility. If you would invest 3,632 in First Trust Exchange on November 5, 2024 and sell it today you would earn a total of 21.00 from holding First Trust Exchange or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Vanguard FTSE Emerging vs. First Trust Exchange
Performance |
| Timeline |
| Vanguard FTSE Emerging |
| First Trust Exchange |
Vanguard FTSE and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and First Trust
The main advantage of trading using opposite Vanguard FTSE and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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 FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Real Estate | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Stock |
| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |