Correlation Between American Express and Amex Exploration
Can any of the company-specific risk be diversified away by investing in both American Express and Amex Exploration 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 Amex Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Amex Exploration, you can compare the effects of market volatilities on American Express and Amex Exploration 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 Amex Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Amex Exploration.
Diversification Opportunities for American Express and Amex Exploration
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Amex is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Amex Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amex Exploration 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 Amex Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amex Exploration has no effect on the direction of American Express i.e., American Express and Amex Exploration go up and down completely randomly.
Pair Corralation between American Express and Amex Exploration
Considering the 90-day investment horizon American Express is expected to generate 0.41 times more return on investment than Amex Exploration. However, American Express is 2.47 times less risky than Amex Exploration. It trades about 0.1 of its potential returns per unit of risk. Amex Exploration is currently generating about 0.0 per unit of risk. If you would invest 15,007 in American Express on September 4, 2024 and sell it today you would earn a total of 15,219 from holding American Express or generate 101.41% 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. Amex Exploration
Performance |
| Timeline |
| American Express |
| Amex Exploration |
American Express and Amex Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Amex Exploration
The main advantage of trading using opposite American Express and Amex Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Amex Exploration 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 Amex Exploration will offset losses from the drop in Amex Exploration's long position.| American Express vs. 360 Finance | American Express vs. Enova International | American Express vs. X Financial Class | American Express vs. LendingClub Corp |
| Amex Exploration vs. Minnova Corp | Amex Exploration vs. Argo Gold | Amex Exploration vs. Advance Gold Corp | Amex Exploration vs. Blue Star Gold |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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