Correlation Between American Express and AXT
Can any of the company-specific risk be diversified away by investing in both American Express and AXT 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 AXT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and AXT Inc, you can compare the effects of market volatilities on American Express and AXT 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 AXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and AXT.
Diversification Opportunities for American Express and AXT
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and AXT is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Express and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc 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 AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of American Express i.e., American Express and AXT go up and down completely randomly.
Pair Corralation between American Express and AXT
Considering the 90-day investment horizon American Express is expected to generate 0.38 times more return on investment than AXT. However, American Express is 2.63 times less risky than AXT. It trades about 0.25 of its potential returns per unit of risk. AXT Inc is currently generating about -0.24 per unit of risk. If you would invest 27,408 in American Express on August 31, 2024 and sell it today you would earn a total of 3,017 from holding American Express or generate 11.01% 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. AXT Inc
Performance |
| Timeline |
| American Express |
| AXT Inc |
American Express and AXT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and AXT
The main advantage of trading using opposite American Express and AXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, AXT 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 AXT will offset losses from the drop in AXT's long position.| American Express vs. Visa Class A | American Express vs. RLJ Lodging Trust | American Express vs. Aquagold International | American Express vs. Stepstone Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |