Correlation Between First Trust and Vanguard Growth

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both First Trust and Vanguard Growth 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 Vanguard Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust NASDAQ 100 and Vanguard Growth Index, you can compare the effects of market volatilities on First Trust and Vanguard Growth 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 Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Vanguard Growth.

Diversification Opportunities for First Trust and Vanguard Growth

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between First and Vanguard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ 100 and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index 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 NASDAQ 100 are associated (or correlated) with Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of First Trust i.e., First Trust and Vanguard Growth go up and down completely randomly.

Pair Corralation between First Trust and Vanguard Growth

Given the investment horizon of 90 days First Trust NASDAQ 100 is expected to under-perform the Vanguard Growth. In addition to that, First Trust is 1.01 times more volatile than Vanguard Growth Index. It trades about -0.16 of its total potential returns per unit of risk. Vanguard Growth Index is currently generating about 0.16 per unit of volatility. If you would invest  40,395  in Vanguard Growth Index on September 22, 2024 and sell it today you would earn a total of  1,383  from holding Vanguard Growth Index or generate 3.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

First Trust NASDAQ 100  vs.  Vanguard Growth Index

 Performance 
       Timeline  
First Trust NASDAQ 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NASDAQ 100 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Vanguard Growth Index 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Trust and Vanguard Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Trust and Vanguard Growth

The main advantage of trading using opposite First Trust and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Vanguard Growth 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 Vanguard Growth will offset losses from the drop in Vanguard Growth's long position.
The idea behind First Trust NASDAQ 100 and Vanguard Growth Index 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

Other Complementary Tools

Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Global Correlations
Find global opportunities by holding instruments from different markets
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets