Correlation Between First Trust and BMO Long
Can any of the company-specific risk be diversified away by investing in both First Trust and BMO Long 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 BMO Long 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 BMO Long Federal, you can compare the effects of market volatilities on First Trust and BMO Long 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 BMO Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and BMO Long.
Diversification Opportunities for First Trust and BMO Long
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and BMO is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding First Trust AlphaDEX and BMO Long Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Long Federal 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 BMO Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Long Federal has no effect on the direction of First Trust i.e., First Trust and BMO Long go up and down completely randomly.
Pair Corralation between First Trust and BMO Long
Assuming the 90 days trading horizon First Trust AlphaDEX is expected to generate 1.53 times more return on investment than BMO Long. However, First Trust is 1.53 times more volatile than BMO Long Federal. It trades about 0.22 of its potential returns per unit of risk. BMO Long Federal is currently generating about 0.03 per unit of risk. If you would invest 8,710 in First Trust AlphaDEX on September 3, 2024 and sell it today you would earn a total of 1,517 from holding First Trust AlphaDEX or generate 17.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust AlphaDEX vs. BMO Long Federal
Performance |
| Timeline |
| First Trust AlphaDEX |
| BMO Long Federal |
First Trust and BMO Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and BMO Long
The main advantage of trading using opposite First Trust and BMO Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, BMO Long 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 Long will offset losses from the drop in BMO Long's long position.| First Trust vs. First Trust AlphaDEX | First Trust vs. FT AlphaDEX Industrials | First Trust vs. BMO SPTSX Equal | First Trust vs. First Trust Senior |
| BMO Long vs. iShares MSCI Emerging | BMO Long vs. iShares MSCI Global | BMO Long vs. iShares Core Canadian | BMO Long vs. Vanguard Total Market |
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.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |