Correlation Between American Express and Apple
Can any of the company-specific risk be diversified away by investing in both American Express and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express Co and Apple Inc DRC, you can compare the effects of market volatilities on American Express and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Apple.
Diversification Opportunities for American Express and Apple
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Apple is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Apple Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc DRC 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 Co are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc DRC has no effect on the direction of American Express i.e., American Express and Apple go up and down completely randomly.
Pair Corralation between American Express and Apple
Assuming the 90 days trading horizon American Express Co is expected to generate 0.89 times more return on investment than Apple. However, American Express Co is 1.13 times less risky than Apple. It trades about 0.29 of its potential returns per unit of risk. Apple Inc DRC is currently generating about -0.13 per unit of risk. If you would invest 2,257,500 in American Express Co on October 20, 2024 and sell it today you would earn a total of 215,000 from holding American Express Co or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express Co vs. Apple Inc DRC
Performance |
| Timeline |
| American Express |
| Apple Inc DRC |
American Express and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Apple
The main advantage of trading using opposite American Express and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| American Express vs. United States Steel | American Express vs. Agrometal SAI | American Express vs. Telecom Argentina | American Express vs. Compania de Transporte |
| Apple vs. Walmart | Apple vs. American Express Co | Apple vs. QUALCOMM Incorporated | Apple vs. United States Steel |
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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