Correlation Between FT AlphaDEX and First Asset
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and First Asset 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 First Asset 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 First Asset Tech, you can compare the effects of market volatilities on FT AlphaDEX and First Asset 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 First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and First Asset.
Diversification Opportunities for FT AlphaDEX and First Asset
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FHG and First is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and First Asset Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Tech 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 First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Tech has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and First Asset go up and down completely randomly.
Pair Corralation between FT AlphaDEX and First Asset
Assuming the 90 days trading horizon FT AlphaDEX is expected to generate 1.1 times less return on investment than First Asset. But when comparing it to its historical volatility, FT AlphaDEX Industrials is 1.33 times less risky than First Asset. It trades about 0.12 of its potential returns per unit of risk. First Asset Tech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,395 in First Asset Tech on September 14, 2024 and sell it today you would earn a total of 821.00 from holding First Asset Tech or generate 58.85% 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. First Asset Tech
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| First Asset Tech |
FT AlphaDEX and First Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and First Asset
The main advantage of trading using opposite FT AlphaDEX and First Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, First Asset 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 First Asset will offset losses from the drop in First Asset'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 |
| First Asset vs. First Asset Energy | First Asset vs. CI Gold Giants | First Asset vs. Harvest Healthcare Leaders | First Asset vs. Hamilton Enhanced Multi Sector |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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