Correlation Between Alternative Strategies and First Trust
Can any of the company-specific risk be diversified away by investing in both Alternative Strategies 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 Alternative Strategies and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Strategies and First Trust Short, you can compare the effects of market volatilities on Alternative Strategies 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 Alternative Strategies with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Strategies and First Trust.
Diversification Opportunities for Alternative Strategies and First Trust
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alternative and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Strategies and First Trust Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Short and Alternative Strategies 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 Alternative Strategies 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 Short has no effect on the direction of Alternative Strategies i.e., Alternative Strategies and First Trust go up and down completely randomly.
Pair Corralation between Alternative Strategies and First Trust
Assuming the 90 days horizon Alternative Strategies is expected to generate 9.38 times more return on investment than First Trust. However, Alternative Strategies is 9.38 times more volatile than First Trust Short. It trades about 0.31 of its potential returns per unit of risk. First Trust Short is currently generating about 0.28 per unit of risk. If you would invest 1,182 in Alternative Strategies on May 30, 2025 and sell it today you would earn a total of 282.00 from holding Alternative Strategies or generate 23.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Strategies vs. First Trust Short
Performance |
| Timeline |
| Alternative Strategies |
| First Trust Short |
Alternative Strategies and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Strategies and First Trust
The main advantage of trading using opposite Alternative Strategies and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Strategies 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.| Alternative Strategies vs. Strategic Advisers Income | Alternative Strategies vs. Buffalo High Yield | Alternative Strategies vs. Pioneer High Yield | Alternative Strategies vs. City National Rochdale |
| First Trust vs. Nationwide Bailard Technology | First Trust vs. Red Oak Technology | First Trust vs. Putnam Global Technology | First Trust vs. Columbia Global Technology |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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