Correlation Between First Trust and Vanguard Malvern

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

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

Diversification Opportunities for First Trust and Vanguard Malvern

-0.04

Correlation Coefficient

First Trust  Vanguard Malvern

Good diversification

The 3 months correlation between First and Vanguard is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Vanguard Malvern Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Malvern Funds 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 Exchange Traded are associated (or correlated) with Vanguard Malvern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Malvern Funds has no effect on the direction of First Trust i.e., First Trust and Vanguard Malvern go up and down completely randomly.

Pair Corralation between First Trust and Vanguard Malvern

Given the investment horizon of 90 days First Trust is expected to generate 1405.17 times less return on investment than Vanguard Malvern. But when comparing it to its historical volatility, First Trust Exchange Traded is 586.57 times less risky than Vanguard Malvern. It trades about 0.09 of its potential returns per unit of risk. Vanguard Malvern Funds is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Vanguard Malvern Funds on May 5, 2025 and sell it today you would earn a total of  7,569  from holding Vanguard Malvern Funds or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.75%
Values	Daily Returns

First Trust Exchange Traded  vs.  Vanguard Malvern Funds

First Trust Exchange

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic 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 Malvern Funds

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Malvern Funds are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vanguard Malvern unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and Vanguard Malvern

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

The idea behind First Trust Exchange Traded and Vanguard Malvern Funds 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.