Correlation Between First Trust and VictoryShares

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

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

Diversification Opportunities for First Trust and VictoryShares

0.0

Correlation Coefficient

First Trust  VictoryShares

Pay attention - limited upside

The 3 months correlation between First and VictoryShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Equity and VictoryShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares 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 Equity are associated (or correlated) with VictoryShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares has no effect on the direction of First Trust i.e., First Trust and VictoryShares go up and down completely randomly.

Pair Corralation between First Trust and VictoryShares

If you would invest  10,315  in First Trust Equity on December 4, 2024 and sell it today you would earn a total of  1,615  from holding First Trust Equity or generate 15.66% return on investment over 90 days.

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

First Trust Equity  vs.  VictoryShares

First Trust Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

VictoryShares

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VictoryShares is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with First Trust and VictoryShares

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

The idea behind First Trust Equity and VictoryShares 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.