Correlation Between Mackenzie International and First Trust

Can any of the company-specific risk be diversified away by investing in both Mackenzie International 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 International 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 International Equity and First Trust AlphaDEX, you can compare the effects of market volatilities on Mackenzie International 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 International with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie International and First Trust.

Diversification Opportunities for Mackenzie International and First Trust

0.77

Correlation Coefficient

Mackenzie International  First Trust

Poor diversification

The 3 months correlation between Mackenzie and First is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie International 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 International 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 International 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 International i.e., Mackenzie International and First Trust go up and down completely randomly.

Pair Corralation between Mackenzie International and First Trust

Assuming the 90 days trading horizon Mackenzie International Equity is expected to generate 0.62 times more return on investment than First Trust. However, Mackenzie International Equity is 1.61 times less risky than First Trust. It trades about 0.2 of its potential returns per unit of risk. First Trust AlphaDEX is currently generating about 0.11 per unit of risk. If you would invest  12,264  in Mackenzie International Equity on April 22, 2025 and sell it today you would earn a total of  1,049  from holding Mackenzie International Equity or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Mackenzie International Equity  vs.  First Trust AlphaDEX

Mackenzie International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie International Equity are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Mackenzie International may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Trust AlphaDEX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust AlphaDEX are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Mackenzie International and First Trust

The main advantage of trading using opposite Mackenzie International and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie International 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 Mackenzie International Equity and First Trust AlphaDEX 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.