Correlation Between American Express and Distribuidora
Can any of the company-specific risk be diversified away by investing in both American Express and Distribuidora 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 Distribuidora 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 Distribuidora de Gas, you can compare the effects of market volatilities on American Express and Distribuidora 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 Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Distribuidora.
Diversification Opportunities for American Express and Distribuidora
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Distribuidora is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Distribuidora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora de Gas 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 Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora de Gas has no effect on the direction of American Express i.e., American Express and Distribuidora go up and down completely randomly.
Pair Corralation between American Express and Distribuidora
Assuming the 90 days trading horizon American Express Co is expected to generate 0.48 times more return on investment than Distribuidora. However, American Express Co is 2.1 times less risky than Distribuidora. It trades about 0.29 of its potential returns per unit of risk. Distribuidora de Gas is currently generating about -0.11 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 | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
American Express Co vs. Distribuidora de Gas
Performance |
| Timeline |
| American Express |
| Distribuidora de Gas |
American Express and Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Distribuidora
The main advantage of trading using opposite American Express and Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Distribuidora 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 Distribuidora will offset losses from the drop in Distribuidora'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 |
| Distribuidora vs. Naturgy BAN SA | Distribuidora vs. Transportadora de Gas | Distribuidora vs. Walmart | Distribuidora vs. Central Puerto SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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