Correlation Between American Express and Banco De
Can any of the company-specific risk be diversified away by investing in both American Express and Banco De 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 Banco De 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 Banco de Valores, you can compare the effects of market volatilities on American Express and Banco De 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 Banco De. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Banco De.
Diversification Opportunities for American Express and Banco De
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Banco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Banco de Valores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco de Valores 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 Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco de Valores has no effect on the direction of American Express i.e., American Express and Banco De go up and down completely randomly.
Pair Corralation between American Express and Banco De
Assuming the 90 days trading horizon American Express Co is expected to generate 1.73 times more return on investment than Banco De. However, American Express is 1.73 times more volatile than Banco de Valores. It trades about 0.23 of its potential returns per unit of risk. Banco de Valores is currently generating about -0.16 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express Co vs. Banco de Valores
Performance |
| Timeline |
| American Express |
| Banco de Valores |
American Express and Banco De Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Banco De
The main advantage of trading using opposite American Express and Banco De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Banco De 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 Banco De will offset losses from the drop in Banco De'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 |
| Banco De vs. Harmony Gold Mining | Banco De vs. Agrometal SAI | Banco De vs. Transportadora de Gas | Banco De vs. Telecom Argentina |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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