Correlation Between FT AlphaDEX and Harvest Equal
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and Harvest Equal 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 Harvest Equal 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 Harvest Equal Weight, you can compare the effects of market volatilities on FT AlphaDEX and Harvest Equal 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 Harvest Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and Harvest Equal.
Diversification Opportunities for FT AlphaDEX and Harvest Equal
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FHG and Harvest is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and Harvest Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Equal Weight 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 Harvest Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Equal Weight has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and Harvest Equal go up and down completely randomly.
Pair Corralation between FT AlphaDEX and Harvest Equal
Assuming the 90 days trading horizon FT AlphaDEX Industrials is expected to generate 1.43 times more return on investment than Harvest Equal. However, FT AlphaDEX is 1.43 times more volatile than Harvest Equal Weight. It trades about 0.03 of its potential returns per unit of risk. Harvest Equal Weight is currently generating about -0.01 per unit of risk. If you would invest 5,935 in FT AlphaDEX Industrials on September 15, 2024 and sell it today you would earn a total of 31.00 from holding FT AlphaDEX Industrials or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FT AlphaDEX Industrials vs. Harvest Equal Weight
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| Harvest Equal Weight |
FT AlphaDEX and Harvest Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and Harvest Equal
The main advantage of trading using opposite FT AlphaDEX and Harvest Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, Harvest Equal 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 Harvest Equal will offset losses from the drop in Harvest Equal's long position.| FT AlphaDEX vs. First Trust AlphaDEX | FT AlphaDEX vs. BMO SPTSX Equal | FT AlphaDEX vs. First Trust Senior |
| Harvest Equal vs. First Trust AlphaDEX | Harvest Equal vs. FT AlphaDEX Industrials | Harvest Equal vs. BMO SPTSX Equal | Harvest Equal 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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