Correlation Between Vanguard Health and First Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Health 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 Vanguard Health and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Health Care and First Trust Short, you can compare the effects of market volatilities on Vanguard Health 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 Vanguard Health with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and First Trust.
Diversification Opportunities for Vanguard Health and First Trust
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and First is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and First Trust Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Short and Vanguard Health 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 Vanguard Health Care 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 Short has no effect on the direction of Vanguard Health i.e., Vanguard Health and First Trust go up and down completely randomly.
Pair Corralation between Vanguard Health and First Trust
Assuming the 90 days horizon Vanguard Health Care is expected to generate 6.94 times more return on investment than First Trust. However, Vanguard Health is 6.94 times more volatile than First Trust Short. It trades about 0.13 of its potential returns per unit of risk. First Trust Short is currently generating about 0.24 per unit of risk. If you would invest 17,425 in Vanguard Health Care on May 27, 2025 and sell it today you would earn a total of 451.00 from holding Vanguard Health Care or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Health Care vs. First Trust Short
Performance |
| Timeline |
| Vanguard Health Care |
| First Trust Short |
Vanguard Health and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and First Trust
The main advantage of trading using opposite Vanguard Health and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health 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.| Vanguard Health vs. Vanguard Energy Fund | Vanguard Health vs. Vanguard Dividend Growth | Vanguard Health vs. Vanguard Wellington Fund | Vanguard Health vs. Vanguard Capital Opportunity |
| First Trust vs. Ips Strategic Capital | First Trust vs. Qs Large Cap | First Trust vs. Flkypx | First Trust vs. Fkhemx |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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