Correlation Between American Express and First Trust
Can any of the company-specific risk be diversified away by investing in both American Express 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 American Express and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and First Trust Nasdaq, you can compare the effects of market volatilities on American Express 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 American Express with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and First Trust.
Diversification Opportunities for American Express and First Trust
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Express and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq 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 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 Nasdaq has no effect on the direction of American Express i.e., American Express and First Trust go up and down completely randomly.
Pair Corralation between American Express and First Trust
Considering the 90-day investment horizon American Express is expected to generate 1.11 times more return on investment than First Trust. However, American Express is 1.11 times more volatile than First Trust Nasdaq. It trades about 0.29 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.29 per unit of risk. If you would invest 27,147 in American Express on August 28, 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 Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. First Trust Nasdaq
Performance |
| Timeline |
| American Express |
| First Trust Nasdaq |
American Express and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and First Trust
The main advantage of trading using opposite American Express and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| First Trust vs. Gabelli ETFs Trust | First Trust vs. First Trust Exchange Traded | First Trust vs. Northern Lights | First Trust vs. First Trust Exchange Traded |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |