Correlation Between American Express and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both American Express and Atlas Copco 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 Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Atlas Copco AB, you can compare the effects of market volatilities on American Express and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Atlas Copco.
Diversification Opportunities for American Express and Atlas Copco
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Atlas is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of American Express i.e., American Express and Atlas Copco go up and down completely randomly.
Pair Corralation between American Express and Atlas Copco
Considering the 90-day investment horizon American Express is expected to generate 0.92 times more return on investment than Atlas Copco. However, American Express is 1.09 times less risky than Atlas Copco. It trades about 0.13 of its potential returns per unit of risk. Atlas Copco AB is currently generating about -0.01 per unit of risk. If you would invest 21,532 in American Express on September 1, 2024 and sell it today you would earn a total of 8,936 from holding American Express or generate 41.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Atlas Copco AB
Performance |
| Timeline |
| American Express |
| Atlas Copco AB |
American Express and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Atlas Copco
The main advantage of trading using opposite American Express and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Atlas Copco vs. GE Aerospace | Atlas Copco vs. Eaton PLC | Atlas Copco vs. Siemens AG Class | Atlas Copco vs. Parker Hannifin |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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