Correlation Between American Express and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both American Express and Franklin FTSE 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 American Express and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Franklin FTSE South, you can compare the effects of market volatilities on American Express and Franklin FTSE 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 American Express with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Franklin FTSE.
Diversification Opportunities for American Express and Franklin FTSE
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Franklin is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Franklin FTSE South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE South and American Express 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 American Express are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE South has no effect on the direction of American Express i.e., American Express and Franklin FTSE go up and down completely randomly.
Pair Corralation between American Express and Franklin FTSE
Considering the 90-day investment horizon American Express is expected to generate 1.3 times more return on investment than Franklin FTSE. However, American Express is 1.3 times more volatile than Franklin FTSE South. It trades about 0.29 of its potential returns per unit of risk. Franklin FTSE South is currently generating about -0.13 per unit of risk. If you would invest 27,147 in American Express on August 27, 2024 and sell it today you would earn a total of 3,374 from holding American Express or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Franklin FTSE South
Performance |
| Timeline |
| American Express |
| Franklin FTSE South |
American Express and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Franklin FTSE
The main advantage of trading using opposite American Express and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
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Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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