Correlation Between VictoryShares International and First Trust

Can any of the company-specific risk be diversified away by investing in both VictoryShares International 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 VictoryShares International and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VictoryShares International High and First Trust SMID, you can compare the effects of market volatilities on VictoryShares International 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 VictoryShares International with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares International and First Trust.

Diversification Opportunities for VictoryShares International and First Trust

0.0

Correlation Coefficient

VictoryShares International  First Trust

Pay attention - limited upside

The 3 months correlation between VictoryShares and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares International Hi and First Trust SMID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust SMID and VictoryShares International 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 VictoryShares International High 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 SMID has no effect on the direction of VictoryShares International i.e., VictoryShares International and First Trust go up and down completely randomly.

Pair Corralation between VictoryShares International and First Trust

If you would invest (100.00) in VictoryShares International High on December 29, 2024 and sell it today you would earn a total of  100.00  from holding VictoryShares International High or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

VictoryShares International Hi  vs.  First Trust SMID

VictoryShares International

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares International High has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, VictoryShares International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

First Trust SMID

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust SMID has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, First Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VictoryShares International and First Trust

The main advantage of trading using opposite VictoryShares International and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares International 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 VictoryShares International High and First Trust SMID 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.