Correlation Between First Trust and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both First Trust and Vanguard Total 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 Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Emerging and Vanguard Total International, you can compare the effects of market volatilities on First Trust and Vanguard Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Vanguard Total.
Diversification Opportunities for First Trust and Vanguard Total
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Vanguard is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Emerging and Vanguard Total International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Inter 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 Emerging are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Inter has no effect on the direction of First Trust i.e., First Trust and Vanguard Total go up and down completely randomly.
Pair Corralation between First Trust and Vanguard Total
Given the investment horizon of 90 days First Trust Emerging is expected to under-perform the Vanguard Total. In addition to that, First Trust is 1.05 times more volatile than Vanguard Total International. It trades about -0.28 of its total potential returns per unit of risk. Vanguard Total International is currently generating about -0.3 per unit of volatility. If you would invest 6,026 in Vanguard Total International on January 20, 2024 and sell it today you would lose (235.00) from holding Vanguard Total International or give up 3.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
First Trust Emerging vs. Vanguard Total International
Performance |
Timeline |
First Trust Emerging |
Vanguard Total Inter |
First Trust and Vanguard Total Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and Vanguard Total
The main advantage of trading using opposite First Trust and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.First Trust vs. First Trust SSI | First Trust vs. First Trust BuyWrite | First Trust vs. First Trust Managed | First Trust vs. First Trust Tactical |
Vanguard Total vs. iShares ESG Advanced | Vanguard Total vs. iShares ESG Advanced | Vanguard Total vs. iShares ESG MSCI | Vanguard Total vs. iShares ESG Aware |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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