Correlation Between FT AlphaDEX and Mackenzie Large
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and Mackenzie Large 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 Mackenzie Large 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 Mackenzie Large Cap, you can compare the effects of market volatilities on FT AlphaDEX and Mackenzie Large 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 Mackenzie Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and Mackenzie Large.
Diversification Opportunities for FT AlphaDEX and Mackenzie Large
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FHG and Mackenzie is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and Mackenzie Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Large Cap 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 Mackenzie Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Large Cap has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and Mackenzie Large go up and down completely randomly.
Pair Corralation between FT AlphaDEX and Mackenzie Large
Assuming the 90 days trading horizon FT AlphaDEX Industrials is expected to generate 1.5 times more return on investment than Mackenzie Large. However, FT AlphaDEX is 1.5 times more volatile than Mackenzie Large Cap. It trades about 0.36 of its potential returns per unit of risk. Mackenzie Large Cap is currently generating about 0.31 per unit of risk. If you would invest 5,533 in FT AlphaDEX Industrials on September 3, 2024 and sell it today you would earn a total of 631.00 from holding FT AlphaDEX Industrials or generate 11.4% 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. Mackenzie Large Cap
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| Mackenzie Large Cap |
FT AlphaDEX and Mackenzie Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and Mackenzie Large
The main advantage of trading using opposite FT AlphaDEX and Mackenzie Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, Mackenzie Large 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 Mackenzie Large will offset losses from the drop in Mackenzie Large'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 |
| Mackenzie Large vs. Franklin Bissett Corporate | Mackenzie Large vs. FT AlphaDEX Industrials | Mackenzie Large vs. Dynamic Active Dividend | Mackenzie Large 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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