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
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Central is 0.0. 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 is expected to generate 2.56 times less return on investment than Central Puerto. But when comparing it to its historical volatility, American Express Co is 1.3 times less risky than Central Puerto. It trades about 0.17 of its potential returns per unit of risk. Central Puerto SA is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 130,500 in Central Puerto SA on August 26, 2024 and sell it today you would earn a total of 25,500 from holding Central Puerto SA or generate 19.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| 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. Harmony Gold Mining | American Express vs. Transportadora de Gas | American Express vs. Agrometal SAI | American Express vs. United States Steel |
| Central Puerto vs. American Express Co | Central Puerto vs. United States Steel | Central Puerto vs. Capex SA | Central Puerto vs. Pfizer Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |