Correlation Between American Express and QUALCOMM Incorporated
Can any of the company-specific risk be diversified away by investing in both American Express and QUALCOMM Incorporated 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 QUALCOMM Incorporated 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 QUALCOMM Incorporated, you can compare the effects of market volatilities on American Express and QUALCOMM Incorporated 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 QUALCOMM Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and QUALCOMM Incorporated.
Diversification Opportunities for American Express and QUALCOMM Incorporated
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and QUALCOMM is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and QUALCOMM Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALCOMM Incorporated 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 QUALCOMM Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALCOMM Incorporated has no effect on the direction of American Express i.e., American Express and QUALCOMM Incorporated go up and down completely randomly.
Pair Corralation between American Express and QUALCOMM Incorporated
Assuming the 90 days trading horizon American Express Co is expected to generate 0.73 times more return on investment than QUALCOMM Incorporated. However, American Express Co is 1.38 times less risky than QUALCOMM Incorporated. It trades about 0.17 of its potential returns per unit of risk. QUALCOMM Incorporated is currently generating about 0.04 per unit of risk. If you would invest 336,897 in American Express Co on September 20, 2024 and sell it today you would earn a total of 1,920,603 from holding American Express Co or generate 570.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
American Express Co vs. QUALCOMM Incorporated
Performance |
| Timeline |
| American Express |
| QUALCOMM Incorporated |
American Express and QUALCOMM Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and QUALCOMM Incorporated
The main advantage of trading using opposite American Express and QUALCOMM Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, QUALCOMM Incorporated 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 QUALCOMM Incorporated will offset losses from the drop in QUALCOMM Incorporated's long position.| American Express vs. QUALCOMM Incorporated | American Express vs. United States Steel | American Express vs. Pfizer Inc | American Express vs. Distribuidora de Gas |
| QUALCOMM Incorporated vs. United States Steel | QUALCOMM Incorporated vs. Agrometal SAI | QUALCOMM Incorporated vs. Compania de Transporte | QUALCOMM Incorporated vs. Harmony Gold Mining |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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