Correlation Between First Trust and Mackenzie Large
Can any of the company-specific risk be diversified away by investing in both First Trust and Mackenzie Large 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 Mackenzie Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Indxx and Mackenzie Large Cap, you can compare the effects of market volatilities on First Trust and Mackenzie Large 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 Mackenzie Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Mackenzie Large.
Diversification Opportunities for First Trust and Mackenzie Large
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Mackenzie is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and Mackenzie Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Large Cap 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 Indxx are associated (or correlated) with Mackenzie Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Large Cap has no effect on the direction of First Trust i.e., First Trust and Mackenzie Large go up and down completely randomly.
Pair Corralation between First Trust and Mackenzie Large
Assuming the 90 days trading horizon First Trust is expected to generate 1.41 times less return on investment than Mackenzie Large. But when comparing it to its historical volatility, First Trust Indxx is 1.04 times less risky than Mackenzie Large. It trades about 0.14 of its potential returns per unit of risk. Mackenzie Large Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 16,888 in Mackenzie Large Cap on September 1, 2024 and sell it today you would earn a total of 7,549 from holding Mackenzie Large Cap or generate 44.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
First Trust Indxx vs. Mackenzie Large Cap
Performance |
| Timeline |
| First Trust Indxx |
| Mackenzie Large Cap |
First Trust and Mackenzie Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Mackenzie Large
The main advantage of trading using opposite First Trust and Mackenzie Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Mackenzie Large 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 Mackenzie Large will offset losses from the drop in Mackenzie Large's long position.| First Trust vs. iShares Canadian HYBrid | First Trust vs. Brompton European Dividend | First Trust vs. Solar Alliance Energy | First Trust vs. PHN Multi Style All Cap |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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