Correlation Between FT AlphaDEX and IShares NASDAQ
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and IShares NASDAQ 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 IShares NASDAQ 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 iShares NASDAQ 100, you can compare the effects of market volatilities on FT AlphaDEX and IShares NASDAQ 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 IShares NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and IShares NASDAQ.
Diversification Opportunities for FT AlphaDEX and IShares NASDAQ
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FHG and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and iShares NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares NASDAQ 100 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 IShares NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares NASDAQ 100 has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and IShares NASDAQ go up and down completely randomly.
Pair Corralation between FT AlphaDEX and IShares NASDAQ
Assuming the 90 days trading horizon FT AlphaDEX Industrials is expected to generate 0.86 times more return on investment than IShares NASDAQ. However, FT AlphaDEX Industrials is 1.16 times less risky than IShares NASDAQ. It trades about 0.12 of its potential returns per unit of risk. iShares NASDAQ 100 is currently generating about 0.1 per unit of risk. If you would invest 4,187 in FT AlphaDEX Industrials on September 12, 2024 and sell it today you would earn a total of 1,803 from holding FT AlphaDEX Industrials or generate 43.06% 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. iShares NASDAQ 100
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| iShares NASDAQ 100 |
FT AlphaDEX and IShares NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and IShares NASDAQ
The main advantage of trading using opposite FT AlphaDEX and IShares NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, IShares NASDAQ 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 IShares NASDAQ will offset losses from the drop in IShares NASDAQ'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 |
| IShares NASDAQ vs. iShares Core SP | IShares NASDAQ vs. iShares SPTSX Capped | IShares NASDAQ vs. BMO NASDAQ 100 | IShares NASDAQ vs. Vanguard SP 500 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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