Correlation Between American Express and EGSHARES BLUE
Can any of the company-specific risk be diversified away by investing in both American Express and EGSHARES BLUE 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 EGSHARES BLUE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and EGSHARES BLUE CHIP, you can compare the effects of market volatilities on American Express and EGSHARES BLUE 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 EGSHARES BLUE. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and EGSHARES BLUE.
Diversification Opportunities for American Express and EGSHARES BLUE
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and EGSHARES is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Express and EGSHARES BLUE CHIP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGSHARES BLUE CHIP 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 EGSHARES BLUE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGSHARES BLUE CHIP has no effect on the direction of American Express i.e., American Express and EGSHARES BLUE go up and down completely randomly.
Pair Corralation between American Express and EGSHARES BLUE
Considering the 90-day investment horizon American Express is expected to generate 1.86 times more return on investment than EGSHARES BLUE. However, American Express is 1.86 times more volatile than EGSHARES BLUE CHIP. It trades about 0.27 of its potential returns per unit of risk. EGSHARES BLUE CHIP is currently generating about 0.23 per unit of risk. If you would invest 27,147 in American Express on August 29, 2024 and sell it today you would earn a total of 3,294 from holding American Express or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. EGSHARES BLUE CHIP
Performance |
| Timeline |
| American Express |
| EGSHARES BLUE CHIP |
American Express and EGSHARES BLUE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and EGSHARES BLUE
The main advantage of trading using opposite American Express and EGSHARES BLUE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, EGSHARES BLUE 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 EGSHARES BLUE will offset losses from the drop in EGSHARES BLUE's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. Discover Financial Services |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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