Correlation Between First Trust and Vanguard Russell
Can any of the company-specific risk be diversified away by investing in both First Trust and Vanguard Russell 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 Vanguard Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Mid and Vanguard Russell 2000, you can compare the effects of market volatilities on First Trust and Vanguard Russell 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 Vanguard Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Vanguard Russell.
Diversification Opportunities for First Trust and Vanguard Russell
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Vanguard is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mid and Vanguard Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Russell 2000 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 Mid are associated (or correlated) with Vanguard Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Russell 2000 has no effect on the direction of First Trust i.e., First Trust and Vanguard Russell go up and down completely randomly.
Pair Corralation between First Trust and Vanguard Russell
Considering the 90-day investment horizon First Trust Mid is expected to generate 0.85 times more return on investment than Vanguard Russell. However, First Trust Mid is 1.17 times less risky than Vanguard Russell. It trades about -0.07 of its potential returns per unit of risk. Vanguard Russell 2000 is currently generating about -0.07 per unit of risk. If you would invest 5,261 in First Trust Mid on January 24, 2024 and sell it today you would lose (90.00) from holding First Trust Mid or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Mid vs. Vanguard Russell 2000
Performance |
| Timeline |
| First Trust Mid |
| Vanguard Russell 2000 |
First Trust and Vanguard Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Vanguard Russell
The main advantage of trading using opposite First Trust and Vanguard Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Vanguard Russell 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 Vanguard Russell will offset losses from the drop in Vanguard Russell's long position.| First Trust vs. Vanguard Quality Factor | First Trust vs. Vanguard Momentum Factor | First Trust vs. Vanguard Multifactor | First Trust vs. Vanguard Minimum Volatility |
| Vanguard Russell vs. Invesco SP MidCap | Vanguard Russell vs. Invesco SP MidCap | Vanguard Russell vs. Invesco SP 500 | Vanguard Russell vs. Invesco SP SmallCap |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |