Correlation Between First Trust and Alger Mid
Can any of the company-specific risk be diversified away by investing in both First Trust and Alger Mid 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 Alger Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Managed and Alger Mid Cap, you can compare the effects of market volatilities on First Trust and Alger Mid 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 Alger Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Alger Mid.
Diversification Opportunities for First Trust and Alger Mid
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Alger is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed and Alger Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Mid Cap 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 Managed are associated (or correlated) with Alger Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Mid Cap has no effect on the direction of First Trust i.e., First Trust and Alger Mid go up and down completely randomly.
Pair Corralation between First Trust and Alger Mid
Considering the 90-day investment horizon First Trust is expected to generate 8.84 times less return on investment than Alger Mid. But when comparing it to its historical volatility, First Trust Managed is 2.91 times less risky than Alger Mid. It trades about 0.06 of its potential returns per unit of risk. Alger Mid Cap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,880 in Alger Mid Cap on October 20, 2024 and sell it today you would earn a total of 107.00 from holding Alger Mid Cap or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Managed vs. Alger Mid Cap
Performance |
| Timeline |
| First Trust Managed |
| Alger Mid Cap |
First Trust and Alger Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Alger Mid
The main advantage of trading using opposite First Trust and Alger Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Alger Mid 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 Alger Mid will offset losses from the drop in Alger Mid's long position.| First Trust vs. WisdomTree Managed Futures | First Trust vs. First Trust LongShort | First Trust vs. First Trust Alternative | First Trust vs. iMGP DBi Managed |
| Alger Mid vs. Vanguard Mid Cap Growth | Alger Mid vs. iShares Russell Mid Cap | Alger Mid vs. ARK Innovation ETF | Alger Mid vs. iShares SP Mid Cap |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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