Correlation Between Amundi EUR and First Trust

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

By analyzing existing cross correlation between Amundi EUR High and First Trust Nasdaq, you can compare the effects of market volatilities on Amundi EUR 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 Amundi EUR with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi EUR and First Trust.

Diversification Opportunities for Amundi EUR and First Trust

0.52

Correlation Coefficient

Amundi EUR  First Trust

Very weak diversification

The 3 months correlation between Amundi and First is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Amundi EUR High 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 Amundi EUR 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 Amundi EUR High 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 Amundi EUR i.e., Amundi EUR and First Trust go up and down completely randomly.

Pair Corralation between Amundi EUR and First Trust

Assuming the 90 days trading horizon Amundi EUR is expected to generate 10.9 times less return on investment than First Trust. But when comparing it to its historical volatility, Amundi EUR High is 5.31 times less risky than First Trust. It trades about 0.17 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  297,900  in First Trust Nasdaq on April 24, 2025 and sell it today you would earn a total of  66,125  from holding First Trust Nasdaq or generate 22.2% return on investment over 90 days.

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

Amundi EUR High  vs.  First Trust Nasdaq

Amundi EUR High

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi EUR High are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Amundi EUR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

First Trust Nasdaq

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Nasdaq are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, First Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amundi EUR and First Trust

The main advantage of trading using opposite Amundi EUR and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amundi EUR 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 Amundi EUR High and First Trust Nasdaq 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.