Correlation Between FT AlphaDEX and BMO NASDAQ
Can any of the company-specific risk be diversified away by investing in both FT AlphaDEX and BMO 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 BMO 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 BMO NASDAQ 100, you can compare the effects of market volatilities on FT AlphaDEX and BMO 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 BMO NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT AlphaDEX and BMO NASDAQ.
Diversification Opportunities for FT AlphaDEX and BMO NASDAQ
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FHG and BMO is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding FT AlphaDEX Industrials and BMO NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO 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 BMO NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO NASDAQ 100 has no effect on the direction of FT AlphaDEX i.e., FT AlphaDEX and BMO NASDAQ go up and down completely randomly.
Pair Corralation between FT AlphaDEX and BMO NASDAQ
Assuming the 90 days trading horizon FT AlphaDEX Industrials is expected to generate 0.92 times more return on investment than BMO NASDAQ. However, FT AlphaDEX Industrials is 1.09 times less risky than BMO NASDAQ. It trades about 0.15 of its potential returns per unit of risk. BMO NASDAQ 100 is currently generating about 0.12 per unit of risk. If you would invest 4,371 in FT AlphaDEX Industrials on September 4, 2024 and sell it today you would earn a total of 1,752 from holding FT AlphaDEX Industrials or generate 40.08% 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. BMO NASDAQ 100
Performance |
| Timeline |
| FT AlphaDEX Industrials |
| BMO NASDAQ 100 |
FT AlphaDEX and BMO NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT AlphaDEX and BMO NASDAQ
The main advantage of trading using opposite FT AlphaDEX and BMO NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT AlphaDEX position performs unexpectedly, BMO 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 BMO NASDAQ will offset losses from the drop in BMO NASDAQ'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 |
| BMO NASDAQ vs. Franklin Bissett Corporate | BMO NASDAQ vs. FT AlphaDEX Industrials | BMO NASDAQ vs. Dynamic Active Dividend | BMO NASDAQ 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |