Correlation Between First Trust and ALPS Electrification

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

By analyzing existing cross correlation between First Trust Dorsey and ALPS Electrification Infrastructure, you can compare the effects of market volatilities on First Trust and ALPS Electrification 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 ALPS Electrification. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ALPS Electrification.

Diversification Opportunities for First Trust and ALPS Electrification

-0.12

Correlation Coefficient

First Trust  ALPS Electrification

Good diversification

The 3 months correlation between First and ALPS is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and ALPS Electrification Infrastru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS Electrification 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 Dorsey are associated (or correlated) with ALPS Electrification. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS Electrification has no effect on the direction of First Trust i.e., First Trust and ALPS Electrification go up and down completely randomly.

Pair Corralation between First Trust and ALPS Electrification

Given the investment horizon of 90 days First Trust Dorsey is expected to under-perform the ALPS Electrification. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Dorsey is 1.75 times less risky than ALPS Electrification. The etf trades about -0.07 of its potential returns per unit of risk. The ALPS Electrification Infrastructure is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,341  in ALPS Electrification Infrastructure on August 21, 2025 and sell it today you would earn a total of  189.00  from holding ALPS Electrification Infrastructure or generate 5.66% return on investment over 90 days.

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

First Trust Dorsey  vs.  ALPS Electrification Infrastru

First Trust Dorsey

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trust Dorsey has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

ALPS Electrification

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in ALPS Electrification Infrastructure are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, ALPS Electrification is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Trust and ALPS Electrification

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

The idea behind First Trust Dorsey and ALPS Electrification Infrastructure 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.