Correlation Between American Express and Glencore Plc
Can any of the company-specific risk be diversified away by investing in both American Express and Glencore Plc 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 Glencore Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Glencore plc, you can compare the effects of market volatilities on American Express and Glencore Plc 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 Glencore Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Glencore Plc.
Diversification Opportunities for American Express and Glencore Plc
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Glencore is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Glencore plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore plc 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 are associated (or correlated) with Glencore Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore plc has no effect on the direction of American Express i.e., American Express and Glencore Plc go up and down completely randomly.
Pair Corralation between American Express and Glencore Plc
Assuming the 90 days trading horizon American Express is expected to generate 1.33 times more return on investment than Glencore Plc. However, American Express is 1.33 times more volatile than Glencore plc. It trades about 0.1 of its potential returns per unit of risk. Glencore plc is currently generating about -0.02 per unit of risk. If you would invest 296,702 in American Express on August 25, 2024 and sell it today you would earn a total of 318,298 from holding American Express or generate 107.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Express vs. Glencore plc
Performance |
| Timeline |
| American Express |
| Glencore plc |
American Express and Glencore Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Glencore Plc
The main advantage of trading using opposite American Express and Glencore Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Glencore Plc 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 Glencore Plc will offset losses from the drop in Glencore Plc's long position.| American Express vs. Visa Inc | American Express vs. Mastercard Incorporated | American Express vs. Gentera SAB de | American Express vs. Unifin Financiera S |
| Glencore Plc vs. Rio Tinto Group | Glencore Plc vs. Vale SA | Glencore Plc vs. Cleveland Cliffs | Glencore Plc vs. Minera Frisco SAB |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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