Correlation Between VanEck Oil and First Trust
Can any of the company-specific risk be diversified away by investing in both VanEck Oil 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 VanEck Oil and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Oil Refiners and First Trust Natural, you can compare the effects of market volatilities on VanEck Oil 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 VanEck Oil with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and First Trust.
Diversification Opportunities for VanEck Oil and First Trust
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VanEck and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Refiners and First Trust Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Natural and VanEck Oil 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 VanEck Oil Refiners 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 Natural has no effect on the direction of VanEck Oil i.e., VanEck Oil and First Trust go up and down completely randomly.
Pair Corralation between VanEck Oil and First Trust
Given the investment horizon of 90 days VanEck Oil Refiners is expected to under-perform the First Trust. In addition to that, VanEck Oil is 1.33 times more volatile than First Trust Natural. It trades about -0.08 of its total potential returns per unit of risk. First Trust Natural is currently generating about 0.13 per unit of volatility. If you would invest 2,686 in First Trust Natural on January 24, 2024 and sell it today you would earn a total of 62.00 from holding First Trust Natural or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
VanEck Oil Refiners vs. First Trust Natural
Performance |
| Timeline |
| VanEck Oil Refiners |
| First Trust Natural |
VanEck Oil and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Oil and First Trust
The main advantage of trading using opposite VanEck Oil and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Oil 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.The idea behind VanEck Oil Refiners and First Trust Natural pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |