Correlation Between FT AlphaDEX and TD Equity
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and TD Equity 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 TD Equity 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 TD Equity CAD, you can compare the effects of market volatilities on FT AlphaDEX and TD Equity 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 TD Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and TD Equity.
Diversification Opportunities for FT AlphaDEX and TD Equity
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FHG and THU is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and TD Equity CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Equity CAD 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 TD Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Equity CAD has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and TD Equity go up and down completely randomly.
Pair Corralation between FT AlphaDEX and TD Equity
Assuming the 90 days trading horizon FT AlphaDEX Industrials is expected to generate 1.79 times more return on investment than TD Equity. However, FT AlphaDEX is 1.79 times more volatile than TD Equity CAD. It trades about 0.33 of its potential returns per unit of risk. TD Equity CAD is currently generating about 0.36 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. TD Equity CAD
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| TD Equity CAD |
FT AlphaDEX and TD Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and TD Equity
The main advantage of trading using opposite FT AlphaDEX and TD Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, TD Equity 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 TD Equity will offset losses from the drop in TD Equity'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 |
| TD Equity vs. Franklin Bissett Corporate | TD Equity vs. FT AlphaDEX Industrials | TD Equity vs. Dynamic Active Dividend | TD Equity 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |