Correlation Between American Express and African Gold
Can any of the company-specific risk be diversified away by investing in both American Express and African Gold 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 African Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and African Gold Acquisition, you can compare the effects of market volatilities on American Express and African Gold 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 African Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and African Gold.
Diversification Opportunities for American Express and African Gold
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and African is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Express and African Gold Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Gold Acquisition 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 African Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Gold Acquisition has no effect on the direction of American Express i.e., American Express and African Gold go up and down completely randomly.
Pair Corralation between American Express and African Gold
Considering the 90-day investment horizon American Express is expected to generate 15.79 times more return on investment than African Gold. However, American Express is 15.79 times more volatile than African Gold Acquisition. It trades about 0.12 of its potential returns per unit of risk. African Gold Acquisition is currently generating about 0.4 per unit of risk. If you would invest 16,785 in American Express on August 31, 2024 and sell it today you would earn a total of 13,683 from holding American Express or generate 81.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 8.29% |
| Values | Daily Returns |
American Express vs. African Gold Acquisition
Performance |
| Timeline |
| American Express |
| African Gold Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and African Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and African Gold
The main advantage of trading using opposite American Express and African Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, African Gold 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 African Gold will offset losses from the drop in African Gold's long position.| American Express vs. Visa Class A | American Express vs. RLJ Lodging Trust | American Express vs. Aquagold International | American Express vs. Stepstone Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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