Correlation Between American Express and Innovator Nasdaq
Can any of the company-specific risk be diversified away by investing in both American Express and Innovator Nasdaq 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 Innovator Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Innovator Nasdaq 100 Power, you can compare the effects of market volatilities on American Express and Innovator Nasdaq 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 Innovator Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Innovator Nasdaq.
Diversification Opportunities for American Express and Innovator Nasdaq
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Innovator is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Innovator Nasdaq 100 Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Nasdaq 100 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 Innovator Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Nasdaq 100 has no effect on the direction of American Express i.e., American Express and Innovator Nasdaq go up and down completely randomly.
Pair Corralation between American Express and Innovator Nasdaq
Considering the 90-day investment horizon American Express is expected to generate 6.44 times more return on investment than Innovator Nasdaq. However, American Express is 6.44 times more volatile than Innovator Nasdaq 100 Power. It trades about 0.29 of its potential returns per unit of risk. Innovator Nasdaq 100 Power is currently generating about 0.26 per unit of risk. If you would invest 27,147 in American Express on August 29, 2024 and sell it today you would earn a total of 3,410 from holding American Express or generate 12.56% 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. Innovator Nasdaq 100 Power
Performance |
| Timeline |
| American Express |
| Innovator Nasdaq 100 |
American Express and Innovator Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Innovator Nasdaq
The main advantage of trading using opposite American Express and Innovator Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Innovator Nasdaq 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 Innovator Nasdaq will offset losses from the drop in Innovator Nasdaq's long position.| American Express vs. Orix Corp Ads | American Express vs. Medallion Financial Corp | American Express vs. Oportun Financial Corp | American Express vs. SLM Corp Pb |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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