Correlation Between American Express and Agrometal SAI
Can any of the company-specific risk be diversified away by investing in both American Express and Agrometal SAI 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 Agrometal SAI 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 Agrometal SAI, you can compare the effects of market volatilities on American Express and Agrometal SAI 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 Agrometal SAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Agrometal SAI.
Diversification Opportunities for American Express and Agrometal SAI
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Agrometal is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI 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 Agrometal SAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrometal SAI has no effect on the direction of American Express i.e., American Express and Agrometal SAI go up and down completely randomly.
Pair Corralation between American Express and Agrometal SAI
Assuming the 90 days trading horizon American Express Co is expected to generate 0.45 times more return on investment than Agrometal SAI. However, American Express Co is 2.24 times less risky than Agrometal SAI. It trades about -0.11 of its potential returns per unit of risk. Agrometal SAI is currently generating about -0.36 per unit of risk. If you would invest 2,482,500 in American Express Co on November 29, 2024 and sell it today you would lose (82,500) from holding American Express Co or give up 3.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express Co vs. Agrometal SAI
Performance |
| Timeline |
| American Express |
| Agrometal SAI |
American Express and Agrometal SAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Agrometal SAI
The main advantage of trading using opposite American Express and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Agrometal SAI 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 Agrometal SAI will offset losses from the drop in Agrometal SAI's long position.| American Express vs. Verizon Communications | American Express vs. Agrometal SAI | American Express vs. Harmony Gold Mining | American Express vs. Transportadora de Gas |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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