Correlation Between FT AlphaDEX and Guardian
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and Guardian 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 Guardian 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 Guardian i3 Quality, you can compare the effects of market volatilities on FT AlphaDEX and Guardian 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 Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and Guardian.
Diversification Opportunities for FT AlphaDEX and Guardian
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FHG and Guardian is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and Guardian i3 Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian i3 Quality 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 Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian i3 Quality has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and Guardian go up and down completely randomly.
Pair Corralation between FT AlphaDEX and Guardian
Assuming the 90 days trading horizon FT AlphaDEX Industrials is expected to generate 1.37 times more return on investment than Guardian. However, FT AlphaDEX is 1.37 times more volatile than Guardian i3 Quality. It trades about 0.33 of its potential returns per unit of risk. Guardian i3 Quality is currently generating about 0.15 per unit of risk. If you would invest 5,533 in FT AlphaDEX Industrials on September 4, 2024 and sell it today you would earn a total of 598.00 from holding FT AlphaDEX Industrials or generate 10.81% 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. Guardian i3 Quality
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| Guardian i3 Quality |
FT AlphaDEX and Guardian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and Guardian
The main advantage of trading using opposite FT AlphaDEX and Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, Guardian 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 Guardian will offset losses from the drop in Guardian's long position.| FT AlphaDEX vs. International Zeolite Corp | FT AlphaDEX vs. European Residential Real | FT AlphaDEX vs. Financial 15 Split | FT AlphaDEX vs. Rubicon Organics |
| Guardian vs. Franklin Bissett Corporate | Guardian vs. FT AlphaDEX Industrials | Guardian vs. Dynamic Active Dividend | Guardian vs. BMO Aggregate Bond |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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