Correlation Between American Express and Molinos Agro
Can any of the company-specific risk be diversified away by investing in both American Express and Molinos Agro 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 Molinos Agro 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 Molinos Agro SA, you can compare the effects of market volatilities on American Express and Molinos Agro 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 Molinos Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Molinos Agro.
Diversification Opportunities for American Express and Molinos Agro
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Molinos is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Molinos Agro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Agro 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 Molinos Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Agro SA has no effect on the direction of American Express i.e., American Express and Molinos Agro go up and down completely randomly.
Pair Corralation between American Express and Molinos Agro
Assuming the 90 days trading horizon American Express is expected to generate 1.36 times less return on investment than Molinos Agro. But when comparing it to its historical volatility, American Express Co is 3.16 times less risky than Molinos Agro. It trades about 0.23 of its potential returns per unit of risk. Molinos Agro SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,980,000 in Molinos Agro SA on November 2, 2024 and sell it today you would earn a total of 280,000 from holding Molinos Agro SA or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Express Co vs. Molinos Agro SA
Performance |
| Timeline |
| American Express |
| Molinos Agro SA |
American Express and Molinos Agro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Molinos Agro
The main advantage of trading using opposite American Express and Molinos Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Molinos Agro 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 Molinos Agro will offset losses from the drop in Molinos Agro'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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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