Correlation Between ALPS Medical and First Trust

Can any of the company-specific risk be diversified away by investing in both ALPS Medical 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 ALPS Medical and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALPS Medical Breakthroughs and First Trust NYSE, you can compare the effects of market volatilities on ALPS Medical 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 ALPS Medical with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALPS Medical and First Trust.

Diversification Opportunities for ALPS Medical and First Trust

0.1

Correlation Coefficient

ALPS Medical  First Trust

Average diversification

The 3 months correlation between ALPS and First is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding ALPS Medical Breakthroughs and First Trust NYSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NYSE and ALPS Medical 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 ALPS Medical Breakthroughs 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 NYSE has no effect on the direction of ALPS Medical i.e., ALPS Medical and First Trust go up and down completely randomly.

Pair Corralation between ALPS Medical and First Trust

Given the investment horizon of 90 days ALPS Medical Breakthroughs is expected to under-perform the First Trust. In addition to that, ALPS Medical is 1.45 times more volatile than First Trust NYSE. It trades about -0.12 of its total potential returns per unit of risk. First Trust NYSE is currently generating about 0.0 per unit of volatility. If you would invest  16,718  in First Trust NYSE on December 27, 2024 and sell it today you would lose (109.00) from holding First Trust NYSE or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ALPS Medical Breakthroughs  vs.  First Trust NYSE

ALPS Medical Breakth

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALPS Medical Breakthroughs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

First Trust NYSE

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust NYSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, First Trust is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ALPS Medical and First Trust

The main advantage of trading using opposite ALPS Medical and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALPS Medical 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.

The idea behind ALPS Medical Breakthroughs and First Trust NYSE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .