Correlation Between American Express and American Shipping
Can any of the company-specific risk be diversified away by investing in both American Express and American Shipping 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 American Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and American Shipping, you can compare the effects of market volatilities on American Express and American Shipping 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 American Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and American Shipping.
Diversification Opportunities for American Express and American Shipping
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and American is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding American Express and American Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shipping 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 American Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shipping has no effect on the direction of American Express i.e., American Express and American Shipping go up and down completely randomly.
Pair Corralation between American Express and American Shipping
Considering the 90-day investment horizon American Express is expected to generate 0.43 times more return on investment than American Shipping. However, American Express is 2.33 times less risky than American Shipping. It trades about 0.08 of its potential returns per unit of risk. American Shipping is currently generating about 0.01 per unit of risk. If you would invest 23,501 in American Express on November 28, 2024 and sell it today you would earn a total of 5,833 from holding American Express or generate 24.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 50.27% |
| Values | Daily Returns |
American Express vs. American Shipping
Performance |
| Timeline |
| American Express |
| American Shipping |
American Express and American Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and American Shipping
The main advantage of trading using opposite American Express and American Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, American Shipping 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 American Shipping will offset losses from the drop in American Shipping's long position.| American Express vs. LM Funding America | American Express vs. Eason Technology Limited | American Express vs. Nisun International Enterprise | American Express vs. Qudian Inc |
| American Shipping vs. Western Bulk Chartering | American Shipping vs. AP Moeller | American Shipping vs. AP Mller | American Shipping vs. Pacific Basin Shipping |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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