Correlation Between VanEck JP and First Trust

Can any of the company-specific risk be diversified away by investing in both VanEck JP 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 JP 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 JP Morgan and First Trust SSI, you can compare the effects of market volatilities on VanEck JP 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 JP with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck JP and First Trust.

Diversification Opportunities for VanEck JP and First Trust

-0.43

Correlation Coefficient

VanEck JP  First Trust

Very good diversification

The 3 months correlation between VanEck and First is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding VanEck JP Morgan and First Trust SSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust SSI and VanEck JP 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 JP Morgan 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 SSI has no effect on the direction of VanEck JP i.e., VanEck JP and First Trust go up and down completely randomly.

Pair Corralation between VanEck JP and First Trust

Given the investment horizon of 90 days VanEck JP Morgan is expected to generate 0.51 times more return on investment than First Trust. However, VanEck JP Morgan is 1.96 times less risky than First Trust. It trades about 0.16 of its potential returns per unit of risk. First Trust SSI is currently generating about -0.05 per unit of risk. If you would invest  2,299  in VanEck JP Morgan on December 25, 2024 and sell it today you would earn a total of  96.00  from holding VanEck JP Morgan or generate 4.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

VanEck JP Morgan  vs.  First Trust SSI

VanEck JP Morgan

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck JP Morgan are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, VanEck JP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

First Trust SSI

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust SSI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, First Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VanEck JP and First Trust

The main advantage of trading using opposite VanEck JP and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck JP 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 JP Morgan and First Trust SSI 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 Commodity Directory module to find actively traded commodities issued by global exchanges.