Correlation Between FT AlphaDEX and Manulife Multifactor
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and Manulife Multifactor 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 Manulife Multifactor 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 Manulife Multifactor Canadian, you can compare the effects of market volatilities on FT AlphaDEX and Manulife Multifactor 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 Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and Manulife Multifactor.
Diversification Opportunities for FT AlphaDEX and Manulife Multifactor
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FHG and Manulife is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and Manulife Multifactor Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor 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 Manulife Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Multifactor has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and Manulife Multifactor go up and down completely randomly.
Pair Corralation between FT AlphaDEX and Manulife Multifactor
Assuming the 90 days trading horizon FT AlphaDEX Industrials is expected to generate 1.87 times more return on investment than Manulife Multifactor. However, FT AlphaDEX is 1.87 times more volatile than Manulife Multifactor Canadian. It trades about 0.12 of its potential returns per unit of risk. Manulife Multifactor Canadian is currently generating about 0.06 per unit of risk. If you would invest 5,525 in FT AlphaDEX Industrials on October 26, 2024 and sell it today you would earn a total of 490.00 from holding FT AlphaDEX Industrials or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FT AlphaDEX Industrials vs. Manulife Multifactor Canadian
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| Manulife Multifactor |
FT AlphaDEX and Manulife Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and Manulife Multifactor
The main advantage of trading using opposite FT AlphaDEX and Manulife Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, Manulife Multifactor 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 Manulife Multifactor will offset losses from the drop in Manulife Multifactor'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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |