Correlation Between American Express and Axim Biotechnologies
Can any of the company-specific risk be diversified away by investing in both American Express and Axim Biotechnologies 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 Axim Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Axim Biotechnologies, you can compare the effects of market volatilities on American Express and Axim Biotechnologies 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 Axim Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Axim Biotechnologies.
Diversification Opportunities for American Express and Axim Biotechnologies
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Axim is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Axim Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axim Biotechnologies 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 Axim Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axim Biotechnologies has no effect on the direction of American Express i.e., American Express and Axim Biotechnologies go up and down completely randomly.
Pair Corralation between American Express and Axim Biotechnologies
Considering the 90-day investment horizon American Express is expected to generate 2.8 times less return on investment than Axim Biotechnologies. But when comparing it to its historical volatility, American Express is 11.22 times less risky than Axim Biotechnologies. It trades about 0.13 of its potential returns per unit of risk. Axim Biotechnologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Axim Biotechnologies on August 31, 2024 and sell it today you would lose (0.53) from holding Axim Biotechnologies or give up 66.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Axim Biotechnologies
Performance |
| Timeline |
| American Express |
| Axim Biotechnologies |
American Express and Axim Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Axim Biotechnologies
The main advantage of trading using opposite American Express and Axim Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Axim Biotechnologies 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 Axim Biotechnologies will offset losses from the drop in Axim Biotechnologies' long position.| American Express vs. Visa Class A | American Express vs. RLJ Lodging Trust | American Express vs. Aquagold International | American Express vs. Stepstone Group |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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