Correlation Between Mackenzie Canadian and First Trust
Can any of the company-specific risk be diversified away by investing in both Mackenzie Canadian and First Trust 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 Canadian and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mackenzie Canadian Equity and First Trust AlphaDEX, you can compare the effects of market volatilities on Mackenzie Canadian and First Trust 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 Canadian with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Canadian and First Trust.
Diversification Opportunities for Mackenzie Canadian and First Trust
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mackenzie and First is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Canadian Equity and First Trust AlphaDEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust AlphaDEX and Mackenzie Canadian 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 Canadian Equity are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust AlphaDEX has no effect on the direction of Mackenzie Canadian i.e., Mackenzie Canadian and First Trust go up and down completely randomly.
Pair Corralation between Mackenzie Canadian and First Trust
Assuming the 90 days trading horizon Mackenzie Canadian Equity is expected to generate 0.87 times more return on investment than First Trust. However, Mackenzie Canadian Equity is 1.14 times less risky than First Trust. It trades about 0.19 of its potential returns per unit of risk. First Trust AlphaDEX is currently generating about 0.05 per unit of risk. If you would invest 11,207 in Mackenzie Canadian Equity on August 26, 2024 and sell it today you would earn a total of 4,328 from holding Mackenzie Canadian Equity or generate 38.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Mackenzie Canadian Equity vs. First Trust AlphaDEX
Performance |
| Timeline |
| Mackenzie Canadian Equity |
| First Trust AlphaDEX |
Mackenzie Canadian and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mackenzie Canadian and First Trust
The main advantage of trading using opposite Mackenzie Canadian and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie Canadian position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Mackenzie Canadian vs. iShares SPTSX 60 | Mackenzie Canadian vs. iShares Core SP | Mackenzie Canadian vs. iShares SPTSX Composite | Mackenzie Canadian vs. iShares Core MSCI |
| First Trust vs. First Trust Indxx | First Trust vs. First Trust Senior | First Trust vs. First Trust Indxx | First Trust vs. First Trust NASDAQ |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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