Correlation Between American Express and WisdomTree Interest
Can any of the company-specific risk be diversified away by investing in both American Express and WisdomTree Interest 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 WisdomTree Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and WisdomTree Interest Rate, you can compare the effects of market volatilities on American Express and WisdomTree Interest 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 WisdomTree Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and WisdomTree Interest.
Diversification Opportunities for American Express and WisdomTree Interest
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and WisdomTree is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Express and WisdomTree Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Interest Rate 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 WisdomTree Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Interest Rate has no effect on the direction of American Express i.e., American Express and WisdomTree Interest go up and down completely randomly.
Pair Corralation between American Express and WisdomTree Interest
Considering the 90-day investment horizon American Express is expected to generate 8.32 times more return on investment than WisdomTree Interest. However, American Express is 8.32 times more volatile than WisdomTree Interest Rate. It trades about 0.28 of its potential returns per unit of risk. WisdomTree Interest Rate is currently generating about 0.11 per unit of risk. If you would invest 27,043 in American Express on August 30, 2024 and sell it today you would earn a total of 3,382 from holding American Express or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. WisdomTree Interest Rate
Performance |
| Timeline |
| American Express |
| WisdomTree Interest Rate |
American Express and WisdomTree Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and WisdomTree Interest
The main advantage of trading using opposite American Express and WisdomTree Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, WisdomTree Interest 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 WisdomTree Interest will offset losses from the drop in WisdomTree Interest's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. X Financial Class | American Express vs. Yirendai |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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