Correlation Between FT AlphaDEX and IShares Global
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and IShares Global 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 FT AlphaDEX and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT AlphaDEX Industrials and iShares Global Agriculture, you can compare the effects of market volatilities on FT AlphaDEX and IShares Global 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 FT AlphaDEX with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and IShares Global.
Diversification Opportunities for FT AlphaDEX and IShares Global
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FHG and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and iShares Global Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Agric and FT AlphaDEX 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 FT AlphaDEX Industrials are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Agric has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and IShares Global go up and down completely randomly.
Pair Corralation between FT AlphaDEX and IShares Global
Assuming the 90 days trading horizon FT AlphaDEX Industrials is expected to generate 1.09 times more return on investment than IShares Global. However, FT AlphaDEX is 1.09 times more volatile than iShares Global Agriculture. It trades about 0.12 of its potential returns per unit of risk. iShares Global Agriculture is currently generating about 0.03 per unit of risk. If you would invest 4,187 in FT AlphaDEX Industrials on September 12, 2024 and sell it today you would earn a total of 1,803 from holding FT AlphaDEX Industrials or generate 43.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FT AlphaDEX Industrials vs. iShares Global Agriculture
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| iShares Global Agric |
FT AlphaDEX and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and IShares Global
The main advantage of trading using opposite FT AlphaDEX and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, IShares Global 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 IShares Global will offset losses from the drop in IShares Global's long position.| FT AlphaDEX vs. First Trust AlphaDEX | FT AlphaDEX vs. First Trust AlphaDEX | FT AlphaDEX vs. First Trust Senior | FT AlphaDEX vs. First Trust Value |
| IShares Global vs. First Trust AlphaDEX | IShares Global vs. FT AlphaDEX Industrials | IShares Global vs. BMO SPTSX Equal | IShares Global vs. First Trust Senior |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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