Correlation Between First Trust and AlphaMark Actively
Can any of the company-specific risk be diversified away by investing in both First Trust and AlphaMark Actively 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 AlphaMark Actively into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Developed and AlphaMark Actively Managed, you can compare the effects of market volatilities on First Trust and AlphaMark Actively 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 AlphaMark Actively. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and AlphaMark Actively.
Diversification Opportunities for First Trust and AlphaMark Actively
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and AlphaMark is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Developed and AlphaMark Actively Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaMark Actively 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 Developed are associated (or correlated) with AlphaMark Actively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaMark Actively has no effect on the direction of First Trust i.e., First Trust and AlphaMark Actively go up and down completely randomly.
Pair Corralation between First Trust and AlphaMark Actively
Given the investment horizon of 90 days First Trust is expected to generate 2.15 times less return on investment than AlphaMark Actively. In addition to that, First Trust is 1.2 times more volatile than AlphaMark Actively Managed. It trades about 0.03 of its total potential returns per unit of risk. AlphaMark Actively Managed is currently generating about 0.07 per unit of volatility. If you would invest 2,455 in AlphaMark Actively Managed on September 3, 2024 and sell it today you would earn a total of 1,085 from holding AlphaMark Actively Managed or generate 44.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.95% |
| Values | Daily Returns |
First Trust Developed vs. AlphaMark Actively Managed
Performance |
| Timeline |
| First Trust Developed |
| AlphaMark Actively |
First Trust and AlphaMark Actively Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and AlphaMark Actively
The main advantage of trading using opposite First Trust and AlphaMark Actively positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, AlphaMark Actively 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 AlphaMark Actively will offset losses from the drop in AlphaMark Actively's long position.| First Trust vs. First Trust Asia | First Trust vs. First Trust United | First Trust vs. First Trust Germany | First Trust vs. First Trust Japan |
| AlphaMark Actively vs. First Trust RiverFront | AlphaMark Actively vs. First Trust RiverFront | AlphaMark Actively vs. Arrow DWA Tactical | AlphaMark Actively vs. First Trust Developed |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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