Correlation Between American Express and Central Puerto
Can any of the company-specific risk be diversified away by investing in both American Express and Central Puerto 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 Central Puerto 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 Central Puerto SA, you can compare the effects of market volatilities on American Express and Central Puerto 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 Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Central Puerto.
Diversification Opportunities for American Express and Central Puerto
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Central is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA 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 Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of American Express i.e., American Express and Central Puerto go up and down completely randomly.
Pair Corralation between American Express and Central Puerto
Assuming the 90 days trading horizon American Express Co is expected to generate 0.44 times more return on investment than Central Puerto. However, American Express Co is 2.28 times less risky than Central Puerto. It trades about 0.23 of its potential returns per unit of risk. Central Puerto SA is currently generating about -0.05 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 | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Express Co vs. Central Puerto SA
Performance |
| Timeline |
| American Express |
| Central Puerto SA |
American Express and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Central Puerto
The main advantage of trading using opposite American Express and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto'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 |
| Central Puerto vs. United States Steel | Central Puerto vs. Harmony Gold Mining | Central Puerto vs. Telecom Argentina | Central Puerto vs. Agrometal SAI |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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