Correlation Between FT AlphaDEX and IA Clarington
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and IA Clarington 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 IA Clarington 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 IA Clarington Floating, you can compare the effects of market volatilities on FT AlphaDEX and IA Clarington 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 IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and IA Clarington.
Diversification Opportunities for FT AlphaDEX and IA Clarington
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between FHG and IFRF is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and IA Clarington Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Floating 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Floating has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and IA Clarington go up and down completely randomly.
Pair Corralation between FT AlphaDEX and IA Clarington
Assuming the 90 days trading horizon FT AlphaDEX Industrials is expected to generate 6.79 times more return on investment than IA Clarington. However, FT AlphaDEX is 6.79 times more volatile than IA Clarington Floating. It trades about 0.27 of its potential returns per unit of risk. IA Clarington Floating is currently generating about 0.03 per unit of risk. If you would invest 5,575 in FT AlphaDEX Industrials on August 26, 2024 and sell it today you would earn a total of 489.00 from holding FT AlphaDEX Industrials or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FT AlphaDEX Industrials vs. IA Clarington Floating
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| IA Clarington Floating |
FT AlphaDEX and IA Clarington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and IA Clarington
The main advantage of trading using opposite FT AlphaDEX and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, IA Clarington 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 IA Clarington will offset losses from the drop in IA Clarington'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 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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