Correlation Between Amazon and First Trust
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and First Trust, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and First Trust.
Diversification Opportunities for Amazon and First Trust
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and First Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust and Amazon 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 Amazon Inc 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 has no effect on the direction of Amazon i.e., Amazon and First Trust go up and down completely randomly.
Pair Corralation between Amazon and First Trust
If you would invest 21,071 in Amazon Inc on December 2, 2024 and sell it today you would earn a total of 157.00 from holding Amazon Inc or generate 0.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Amazon Inc vs. First Trust
Performance |
Timeline |
Amazon Inc |
First Trust |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Amazon and First Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amazon and First Trust
The main advantage of trading using opposite Amazon and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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 Amazon Inc and First Trust 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |