Correlation Between First Trust and Virtus Global
Can any of the company-specific risk be diversified away by investing in both First Trust and Virtus Global 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 First Trust and Virtus Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Virtus Global Multi, you can compare the effects of market volatilities on First Trust and Virtus Global 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 First Trust with a short position of Virtus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Virtus Global.
Diversification Opportunities for First Trust and Virtus Global
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Virtus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Virtus Global Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Global Multi and First Trust 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 First Trust Exchange Traded are associated (or correlated) with Virtus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Global Multi has no effect on the direction of First Trust i.e., First Trust and Virtus Global go up and down completely randomly.
Pair Corralation between First Trust and Virtus Global
Given the investment horizon of 90 days First Trust is expected to generate 4.96 times less return on investment than Virtus Global. But when comparing it to its historical volatility, First Trust Exchange Traded is 14.61 times less risky than Virtus Global. It trades about 0.7 of its potential returns per unit of risk. Virtus Global Multi is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 784.00 in Virtus Global Multi on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Virtus Global Multi or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Virtus Global Multi
Performance |
| Timeline |
| First Trust Exchange |
| Virtus Global Multi |
First Trust and Virtus Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Virtus Global
The main advantage of trading using opposite First Trust and Virtus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Virtus Global 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 Virtus Global will offset losses from the drop in Virtus Global's long position.| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. Matthews China Discovery |
| Virtus Global vs. Brandywineglobal Globalome Opportunities | Virtus Global vs. RiverNorth Specialty Finance | Virtus Global vs. Western Asset Mortgage | Virtus Global vs. Stone Harbor Emerging |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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