Correlation Between American Express and Bolsas Y
Can any of the company-specific risk be diversified away by investing in both American Express and Bolsas Y 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 Bolsas Y 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 Bolsas y Mercados, you can compare the effects of market volatilities on American Express and Bolsas Y 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 Bolsas Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Bolsas Y.
Diversification Opportunities for American Express and Bolsas Y
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Bolsas is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Bolsas y Mercados in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsas y Mercados 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 Bolsas Y. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsas y Mercados has no effect on the direction of American Express i.e., American Express and Bolsas Y go up and down completely randomly.
Pair Corralation between American Express and Bolsas Y
Assuming the 90 days trading horizon American Express Co is expected to generate 0.69 times more return on investment than Bolsas Y. However, American Express Co is 1.44 times less risky than Bolsas Y. It trades about 0.23 of its potential returns per unit of risk. Bolsas y Mercados is currently generating about -0.07 per unit of risk. If you would invest 2,327,495 in American Express Co on November 2, 2024 and sell it today you would earn a total of 197,505 from holding American Express Co or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express Co vs. Bolsas y Mercados
Performance |
| Timeline |
| American Express |
| Bolsas y Mercados |
American Express and Bolsas Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Bolsas Y
The main advantage of trading using opposite American Express and Bolsas Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Bolsas Y 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 Bolsas Y will offset losses from the drop in Bolsas Y's long position.| American Express vs. International Business Machines | American Express vs. Transportadora de Gas | American Express vs. Agrometal SAI | American Express vs. Grimoldi SA |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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