Correlation Between AMERICAN EXPRESS and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both AMERICAN EXPRESS and Canlan Ice 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 Canlan Ice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMERICAN EXPRESS CDR and Canlan Ice Sports, you can compare the effects of market volatilities on AMERICAN EXPRESS and Canlan Ice 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 Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMERICAN EXPRESS and Canlan Ice.
Diversification Opportunities for AMERICAN EXPRESS and Canlan Ice
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between AMERICAN and Canlan is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN EXPRESS CDR and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports 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 CDR are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of AMERICAN EXPRESS i.e., AMERICAN EXPRESS and Canlan Ice go up and down completely randomly.
Pair Corralation between AMERICAN EXPRESS and Canlan Ice
Assuming the 90 days trading horizon AMERICAN EXPRESS CDR is expected to generate 1.39 times more return on investment than Canlan Ice. However, AMERICAN EXPRESS is 1.39 times more volatile than Canlan Ice Sports. It trades about 0.16 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.07 per unit of risk. If you would invest 2,373 in AMERICAN EXPRESS CDR on August 30, 2024 and sell it today you would earn a total of 311.00 from holding AMERICAN EXPRESS CDR or generate 13.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
AMERICAN EXPRESS CDR vs. Canlan Ice Sports
Performance |
| Timeline |
| AMERICAN EXPRESS CDR |
| Canlan Ice Sports |
AMERICAN EXPRESS and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMERICAN EXPRESS and Canlan Ice
The main advantage of trading using opposite AMERICAN EXPRESS and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERICAN EXPRESS position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.| AMERICAN EXPRESS vs. Guru Organic Energy | AMERICAN EXPRESS vs. Westshore Terminals Investment | AMERICAN EXPRESS vs. Upstart Investments | AMERICAN EXPRESS vs. Canadian Utilities Limited |
| Canlan Ice vs. BMTC Group | Canlan Ice vs. Caldwell Partners International | Canlan Ice vs. TWC Enterprises | Canlan Ice vs. Madison Pacific Properties |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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