Correlation Between American Express and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both American Express and Airtel Africa 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 Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Airtel Africa Plc, you can compare the effects of market volatilities on American Express and Airtel Africa 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 Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Airtel Africa.
Diversification Opportunities for American Express and Airtel Africa
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Airtel is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa 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 Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of American Express i.e., American Express and Airtel Africa go up and down completely randomly.
Pair Corralation between American Express and Airtel Africa
Considering the 90-day investment horizon American Express is expected to generate 0.42 times more return on investment than Airtel Africa. However, American Express is 2.38 times less risky than Airtel Africa. It trades about 0.3 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.05 per unit of risk. If you would invest 27,008 in American Express on September 1, 2024 and sell it today you would earn a total of 3,460 from holding American Express or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Airtel Africa Plc
Performance |
| Timeline |
| American Express |
| Airtel Africa Plc |
American Express and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Airtel Africa
The main advantage of trading using opposite American Express and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Airtel Africa vs. BCE Inc | Airtel Africa vs. Axiologix | Airtel Africa vs. Advanced Info Service | Airtel Africa vs. American Nortel Communications |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |