Correlation Between First Trust and CI Canada

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

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

Diversification Opportunities for First Trust and CI Canada

0.92

Correlation Coefficient

First Trust  CI Canada

Almost no diversification

The 3 months correlation between First and DGRC is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Trust AlphaDEX and CI Canada Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canada Quality and First Trust 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 First Trust AlphaDEX are associated (or correlated) with CI Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canada Quality has no effect on the direction of First Trust i.e., First Trust and CI Canada go up and down completely randomly.

Pair Corralation between First Trust and CI Canada

Assuming the 90 days trading horizon First Trust AlphaDEX is expected to generate 1.77 times more return on investment than CI Canada. However, First Trust is 1.77 times more volatile than CI Canada Quality. It trades about 0.32 of its potential returns per unit of risk. CI Canada Quality is currently generating about 0.28 per unit of risk. If you would invest  9,794  in First Trust AlphaDEX on April 6, 2025 and sell it today you would earn a total of  556.00  from holding First Trust AlphaDEX or generate 5.68% return on investment over 90 days.

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

First Trust AlphaDEX  vs.  CI Canada Quality

First Trust AlphaDEX

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust AlphaDEX are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Trust displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Canada Quality

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canada Quality are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Canada displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and CI Canada

The main advantage of trading using opposite First Trust and CI Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, CI Canada 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 CI Canada will offset losses from the drop in CI Canada's long position.

The idea behind First Trust AlphaDEX and CI Canada Quality 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.