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 Exchange Traded, 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

0.74

Correlation Coefficient

Vanguard Health  First Trust

Poor diversification

The 3 months correlation between Vanguard and First is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange 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 Exchange 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

Considering the 90-day investment horizon Vanguard Health Care is expected to generate 0.94 times more return on investment than First Trust. However, Vanguard Health Care is 1.06 times less risky than First Trust. It trades about 0.21 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.07 per unit of risk. If you would invest  25,419  in Vanguard Health Care on September 17, 2025 and sell it today you would earn a total of  3,232  from holding Vanguard Health Care or generate 12.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Vanguard Health Care  vs.  First Trust Exchange Traded

Vanguard Health Care

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Health Care are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Vanguard Health may actually be approaching a critical reversion point that can send shares even higher in January 2026.

First Trust Exchange

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 5 (%) 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 recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

The idea behind Vanguard Health Care and First Trust Exchange Traded 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.