Correlation Between American Express and Airborne Wireless
Can any of the company-specific risk be diversified away by investing in both American Express and Airborne Wireless 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 Airborne Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Airborne Wireless Network, you can compare the effects of market volatilities on American Express and Airborne Wireless 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 Airborne Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Airborne Wireless.
Diversification Opportunities for American Express and Airborne Wireless
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Airborne is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Airborne Wireless Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airborne Wireless Network 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 Airborne Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airborne Wireless Network has no effect on the direction of American Express i.e., American Express and Airborne Wireless go up and down completely randomly.
Pair Corralation between American Express and Airborne Wireless
Considering the 90-day investment horizon American Express is expected to generate 13.21 times less return on investment than Airborne Wireless. But when comparing it to its historical volatility, American Express is 37.85 times less risky than Airborne Wireless. It trades about 0.14 of its potential returns per unit of risk. Airborne Wireless Network is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Airborne Wireless Network on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Airborne Wireless Network or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.7% |
| Values | Daily Returns |
American Express vs. Airborne Wireless Network
Performance |
| Timeline |
| American Express |
| Airborne Wireless Network |
American Express and Airborne Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Airborne Wireless
The main advantage of trading using opposite American Express and Airborne Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Airborne Wireless 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 Airborne Wireless will offset losses from the drop in Airborne Wireless' long position.| American Express vs. Victory Integrity Smallmid Cap | American Express vs. Hilton Worldwide Holdings | American Express vs. NVIDIA | American Express vs. JPMorgan Chase Co |
| Airborne Wireless vs. BCE Inc | Airborne Wireless vs. Axiologix | Airborne Wireless vs. Advanced Info Service | Airborne Wireless 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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