Correlation Between BetaPro SP and FT AlphaDEX
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and FT AlphaDEX 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 BetaPro SP and FT AlphaDEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SP 500 and FT AlphaDEX Industrials, you can compare the effects of market volatilities on BetaPro SP and FT AlphaDEX 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 BetaPro SP with a short position of FT AlphaDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and FT AlphaDEX.
Diversification Opportunities for BetaPro SP and FT AlphaDEX
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaPro and FHG is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and FT AlphaDEX Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT AlphaDEX Industrials and BetaPro SP 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 BetaPro SP 500 are associated (or correlated) with FT AlphaDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT AlphaDEX Industrials has no effect on the direction of BetaPro SP i.e., BetaPro SP and FT AlphaDEX go up and down completely randomly.
Pair Corralation between BetaPro SP and FT AlphaDEX
Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the FT AlphaDEX. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro SP 500 is 1.85 times less risky than FT AlphaDEX. The etf trades about -0.31 of its potential returns per unit of risk. The FT AlphaDEX Industrials is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 5,533 in FT AlphaDEX Industrials on September 3, 2024 and sell it today you would earn a total of 631.00 from holding FT AlphaDEX Industrials or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SP 500 vs. FT AlphaDEX Industrials
Performance |
| Timeline |
| BetaPro SP 500 |
| FT AlphaDEX Industrials |
BetaPro SP and FT AlphaDEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and FT AlphaDEX
The main advantage of trading using opposite BetaPro SP and FT AlphaDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, FT AlphaDEX 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 FT AlphaDEX will offset losses from the drop in FT AlphaDEX's long position.| BetaPro SP vs. BetaPro SP TSX | BetaPro SP vs. BetaPro SP TSX | BetaPro SP vs. BetaPro SPTSX Capped | BetaPro SP vs. BetaPro SPTSX 60 |
| FT AlphaDEX vs. First Trust AlphaDEX | FT AlphaDEX vs. First Trust AlphaDEX | FT AlphaDEX vs. First Trust Senior | FT AlphaDEX vs. First Trust Value |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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