Correlation Between First Trust and Harvest Equal
Can any of the company-specific risk be diversified away by investing in both First Trust and Harvest Equal 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 First Trust and Harvest Equal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust AlphaDEX and Harvest Equal Weight, you can compare the effects of market volatilities on First Trust and Harvest Equal 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 First Trust with a short position of Harvest Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Harvest Equal.
Diversification Opportunities for First Trust and Harvest Equal
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Harvest is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Trust AlphaDEX and Harvest Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Equal Weight and First Trust 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 First Trust AlphaDEX are associated (or correlated) with Harvest Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Equal Weight has no effect on the direction of First Trust i.e., First Trust and Harvest Equal go up and down completely randomly.
Pair Corralation between First Trust and Harvest Equal
Assuming the 90 days trading horizon First Trust AlphaDEX is expected to under-perform the Harvest Equal. In addition to that, First Trust is 1.25 times more volatile than Harvest Equal Weight. It trades about -0.06 of its total potential returns per unit of risk. Harvest Equal Weight is currently generating about -0.01 per unit of volatility. If you would invest 1,760 in Harvest Equal Weight on September 15, 2024 and sell it today you would lose (4.00) from holding Harvest Equal Weight or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust AlphaDEX vs. Harvest Equal Weight
Performance |
| Timeline |
| First Trust AlphaDEX |
| Harvest Equal Weight |
First Trust and Harvest Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Harvest Equal
The main advantage of trading using opposite First Trust and Harvest Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Harvest Equal 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 Harvest Equal will offset losses from the drop in Harvest Equal's long position.| First Trust vs. First Trust AlphaDEX | First Trust vs. FT AlphaDEX Industrials | First Trust vs. BMO Equal Weight | First Trust vs. iShares Global Healthcare |
| Harvest Equal vs. First Trust AlphaDEX | Harvest Equal vs. FT AlphaDEX Industrials | Harvest Equal vs. BMO SPTSX Equal | Harvest Equal vs. First Trust Senior |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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