Correlation Between First Trust and V Square

Can any of the company-specific risk be diversified away by investing in both First Trust and V Square 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 V Square 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 V Square Quantitative Management, you can compare the effects of market volatilities on First Trust and V Square 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 V Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and V Square.

Diversification Opportunities for First Trust and V Square

0.52

Correlation Coefficient

First Trust  V Square

Very weak diversification

The 3 months correlation between First and VDNI is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and V Square Quantitative Manageme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Square Quantitative 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 V Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Square Quantitative has no effect on the direction of First Trust i.e., First Trust and V Square go up and down completely randomly.

Pair Corralation between First Trust and V Square

If you would invest  1,984  in First Trust Exchange Traded on September 16, 2024 and sell it today you would earn a total of  29.00  from holding First Trust Exchange Traded or generate 1.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

First Trust Exchange Traded  vs.  V Square Quantitative Manageme

First Trust Exchange

Risk-Adjusted Performance

7 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, First Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

V Square Quantitative

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Square Quantitative Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, V Square is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First Trust and V Square

The main advantage of trading using opposite First Trust and V Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, V Square 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 V Square will offset losses from the drop in V Square's long position.

The idea behind First Trust Exchange Traded and V Square Quantitative Management 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.

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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 Stocks Directory module to find actively traded stocks across global markets.