Correlation Between Virtus ETF and First Trust
Can any of the company-specific risk be diversified away by investing in both Virtus ETF 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 Virtus ETF and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus ETF Trust and First Trust Senior, you can compare the effects of market volatilities on Virtus ETF 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 Virtus ETF with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus ETF and First Trust.
Diversification Opportunities for Virtus ETF and First Trust
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Virtus and First is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Virtus ETF Trust and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and Virtus ETF 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 Virtus ETF Trust 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 Senior has no effect on the direction of Virtus ETF i.e., Virtus ETF and First Trust go up and down completely randomly.
Pair Corralation between Virtus ETF and First Trust
Given the investment horizon of 90 days Virtus ETF Trust is expected to generate 1.2 times more return on investment than First Trust. However, Virtus ETF is 1.2 times more volatile than First Trust Senior. It trades about 0.52 of its potential returns per unit of risk. First Trust Senior is currently generating about 0.51 per unit of risk. If you would invest 2,292 in Virtus ETF Trust on April 29, 2025 and sell it today you would earn a total of 70.00 from holding Virtus ETF Trust or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus ETF Trust vs. First Trust Senior
Performance |
| Timeline |
| Virtus ETF Trust |
| First Trust Senior |
Virtus ETF and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus ETF and First Trust
The main advantage of trading using opposite Virtus ETF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus ETF 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.| Virtus ETF vs. Franklin Liberty Senior | Virtus ETF vs. Pacer Pacific Asset | Virtus ETF vs. JPMorgan USD Emerging | Virtus ETF vs. Virtus Newfleet Multi Sector |
| First Trust vs. First Trust Tactical | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Managed |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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