Correlation Between Mackenzie Large and FT AlphaDEX
Can any of the company-specific risk be diversified away by investing in both Mackenzie Large 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 Mackenzie Large and FT AlphaDEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mackenzie Large Cap and FT AlphaDEX Industrials, you can compare the effects of market volatilities on Mackenzie Large 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 Mackenzie Large with a short position of FT AlphaDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Large and FT AlphaDEX.
Diversification Opportunities for Mackenzie Large and FT AlphaDEX
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mackenzie and FHG is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Large Cap 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 Mackenzie Large 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 Mackenzie Large Cap 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 Mackenzie Large i.e., Mackenzie Large and FT AlphaDEX go up and down completely randomly.
Pair Corralation between Mackenzie Large and FT AlphaDEX
Assuming the 90 days trading horizon Mackenzie Large is expected to generate 1.13 times less return on investment than FT AlphaDEX. But when comparing it to its historical volatility, Mackenzie Large Cap is 1.22 times less risky than FT AlphaDEX. It trades about 0.11 of its potential returns per unit of risk. FT AlphaDEX Industrials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,815 in FT AlphaDEX Industrials on September 3, 2024 and sell it today you would earn a total of 2,349 from holding FT AlphaDEX Industrials or generate 61.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mackenzie Large Cap vs. FT AlphaDEX Industrials
Performance |
| Timeline |
| Mackenzie Large Cap |
| FT AlphaDEX Industrials |
Mackenzie Large and FT AlphaDEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mackenzie Large and FT AlphaDEX
The main advantage of trading using opposite Mackenzie Large and FT AlphaDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie Large 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.| Mackenzie Large vs. Franklin Bissett Corporate | Mackenzie Large vs. FT AlphaDEX Industrials | Mackenzie Large vs. Dynamic Active Dividend | Mackenzie Large vs. BMO Aggregate Bond |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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