Correlation Between American Express and Barings BDC
Can any of the company-specific risk be diversified away by investing in both American Express and Barings BDC 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 Barings BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Barings BDC, you can compare the effects of market volatilities on American Express and Barings BDC 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 Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Barings BDC.
Diversification Opportunities for American Express and Barings BDC
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Barings is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC 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 Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of American Express i.e., American Express and Barings BDC go up and down completely randomly.
Pair Corralation between American Express and Barings BDC
Considering the 90-day investment horizon American Express is expected to generate 1.3 times more return on investment than Barings BDC. However, American Express is 1.3 times more volatile than Barings BDC. It trades about 0.18 of its potential returns per unit of risk. Barings BDC is currently generating about 0.07 per unit of risk. If you would invest 15,118 in American Express on September 1, 2024 and sell it today you would earn a total of 15,350 from holding American Express or generate 101.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Barings BDC
Performance |
| Timeline |
| American Express |
| Barings BDC |
American Express and Barings BDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Barings BDC
The main advantage of trading using opposite American Express and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Barings BDC 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 Barings BDC will offset losses from the drop in Barings BDC's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Barings BDC vs. Visa Class A | Barings BDC vs. Diamond Hill Investment | Barings BDC vs. Distoken Acquisition | Barings BDC vs. Associated Capital 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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