Correlation Between American Express and Ambase Corp
Can any of the company-specific risk be diversified away by investing in both American Express and Ambase Corp 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 Ambase Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Ambase Corp, you can compare the effects of market volatilities on American Express and Ambase Corp 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 Ambase Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Ambase Corp.
Diversification Opportunities for American Express and Ambase Corp
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Ambase is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Ambase Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambase Corp 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 Ambase Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambase Corp has no effect on the direction of American Express i.e., American Express and Ambase Corp go up and down completely randomly.
Pair Corralation between American Express and Ambase Corp
Considering the 90-day investment horizon American Express is expected to generate 0.53 times more return on investment than Ambase Corp. However, American Express is 1.9 times less risky than Ambase Corp. It trades about 0.27 of its potential returns per unit of risk. Ambase Corp is currently generating about -0.05 per unit of risk. If you would invest 27,147 in American Express on August 29, 2024 and sell it today you would earn a total of 3,294 from holding American Express or generate 12.13% 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. Ambase Corp
Performance |
| Timeline |
| American Express |
| Ambase Corp |
American Express and Ambase Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Ambase Corp
The main advantage of trading using opposite American Express and Ambase Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Ambase Corp 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 Ambase Corp will offset losses from the drop in Ambase Corp's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. Discover Financial Services |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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