Correlation Between American Express and A1
Can any of the company-specific risk be diversified away by investing in both American Express and A1 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 A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and A1 Group, you can compare the effects of market volatilities on American Express and A1 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 A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and A1.
Diversification Opportunities for American Express and A1
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and A1 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Express and A1 Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1 Group 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 A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1 Group has no effect on the direction of American Express i.e., American Express and A1 go up and down completely randomly.
Pair Corralation between American Express and A1
Considering the 90-day investment horizon American Express is expected to generate 0.11 times more return on investment than A1. However, American Express is 9.37 times less risky than A1. It trades about 0.18 of its potential returns per unit of risk. A1 Group is currently generating about -0.02 per unit of risk. If you would invest 22,480 in American Express on November 3, 2024 and sell it today you would earn a total of 9,265 from holding American Express or generate 41.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
American Express vs. A1 Group
Performance |
| Timeline |
| American Express |
| A1 Group |
American Express and A1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and A1
The main advantage of trading using opposite American Express and A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, A1 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 A1 will offset losses from the drop in A1's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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