Correlation Between American Express and Amana Developing
Can any of the company-specific risk be diversified away by investing in both American Express and Amana Developing 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 Amana Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Amana Developing World, you can compare the effects of market volatilities on American Express and Amana Developing 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 Amana Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Amana Developing.
Diversification Opportunities for American Express and Amana Developing
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Amana is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Amana Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Developing World 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 Amana Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Developing World has no effect on the direction of American Express i.e., American Express and Amana Developing go up and down completely randomly.
Pair Corralation between American Express and Amana Developing
Considering the 90-day investment horizon American Express is expected to generate 1.74 times more return on investment than Amana Developing. However, American Express is 1.74 times more volatile than Amana Developing World. It trades about 0.17 of its potential returns per unit of risk. Amana Developing World is currently generating about 0.07 per unit of risk. If you would invest 16,640 in American Express on September 4, 2024 and sell it today you would earn a total of 13,571 from holding American Express or generate 81.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Amana Developing World
Performance |
| Timeline |
| American Express |
| Amana Developing World |
American Express and Amana Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Amana Developing
The main advantage of trading using opposite American Express and Amana Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Amana Developing 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 Amana Developing will offset losses from the drop in Amana Developing's long position.| American Express vs. 360 Finance | American Express vs. Enova International | American Express vs. X Financial Class | American Express vs. LendingClub Corp |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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