Correlation Between Alger ETF and First Trust

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

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

Diversification Opportunities for Alger ETF and First Trust

-0.2

Correlation Coefficient

Alger ETF  First Trust

Good diversification

The 3 months correlation between Alger and First is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding The Alger ETF and First Trust Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dorsey and Alger ETF 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 The Alger ETF 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 Dorsey has no effect on the direction of Alger ETF i.e., Alger ETF and First Trust go up and down completely randomly.

Pair Corralation between Alger ETF and First Trust

Given the investment horizon of 90 days The Alger ETF is expected to generate 2.19 times more return on investment than First Trust. However, Alger ETF is 2.19 times more volatile than First Trust Dorsey. It trades about 0.08 of its potential returns per unit of risk. First Trust Dorsey is currently generating about 0.02 per unit of risk. If you would invest  3,267  in The Alger ETF on August 12, 2025 and sell it today you would earn a total of  198.00  from holding The Alger ETF or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

The Alger ETF  vs.  First Trust Dorsey

Alger ETF

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in The Alger ETF are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Alger ETF is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

First Trust Dorsey

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Dorsey are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, First Trust is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Alger ETF and First Trust

The main advantage of trading using opposite Alger ETF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger ETF 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 The Alger ETF and First Trust Dorsey 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.