Correlation Between VanEck Gold and First Trust

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

Diversification Opportunities for VanEck Gold and First Trust

0.0

Correlation Coefficient

VanEck Gold  First Trust

Pay attention - limited upside

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

Pair Corralation between VanEck Gold and First Trust

If you would invest (100.00) in First Trust on October 6, 2024 and sell it today you would earn a total of  100.00  from holding First Trust 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

VanEck Gold Miners  vs.  First Trust

VanEck Gold Miners

Risk-Adjusted Performance

0 of 100

Very Weak

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

First Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust 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 Gold and First Trust

The main advantage of trading using opposite VanEck Gold and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Gold 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 Gold Miners and First Trust 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.