Correlation Between American Express and Activision Blizzard
Can any of the company-specific risk be diversified away by investing in both American Express and Activision Blizzard 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 Activision Blizzard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Activision Blizzard, you can compare the effects of market volatilities on American Express and Activision Blizzard 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 Activision Blizzard. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Activision Blizzard.
Diversification Opportunities for American Express and Activision Blizzard
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Activision is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Activision Blizzard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Activision Blizzard 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 Activision Blizzard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Activision Blizzard has no effect on the direction of American Express i.e., American Express and Activision Blizzard go up and down completely randomly.
Pair Corralation between American Express and Activision Blizzard
If you would invest 23,556 in American Express on August 30, 2024 and sell it today you would earn a total of 6,869 from holding American Express or generate 29.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.79% |
| Values | Daily Returns |
American Express vs. Activision Blizzard
Performance |
| Timeline |
| American Express |
| Activision Blizzard |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and Activision Blizzard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Activision Blizzard
The main advantage of trading using opposite American Express and Activision Blizzard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Activision Blizzard 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 Activision Blizzard will offset losses from the drop in Activision Blizzard's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. X Financial Class | American Express vs. Yirendai |
| Activision Blizzard vs. Take Two Interactive Software | Activision Blizzard vs. Nintendo Co ADR | Activision Blizzard vs. NetEase | Activision Blizzard vs. Playtika Holding Corp |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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