Correlation Between American Express and Blue Line
Can any of the company-specific risk be diversified away by investing in both American Express and Blue Line 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 Blue Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Blue Line Protection, you can compare the effects of market volatilities on American Express and Blue Line 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 Blue Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Blue Line.
Diversification Opportunities for American Express and Blue Line
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Blue is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Blue Line Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Line Protection 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 Blue Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Line Protection has no effect on the direction of American Express i.e., American Express and Blue Line go up and down completely randomly.
Pair Corralation between American Express and Blue Line
Considering the 90-day investment horizon American Express is expected to generate 0.16 times more return on investment than Blue Line. However, American Express is 6.35 times less risky than Blue Line. It trades about 0.25 of its potential returns per unit of risk. Blue Line Protection is currently generating about -0.06 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 | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Express vs. Blue Line Protection
Performance |
Timeline |
American Express |
Blue Line Protection |
American Express and Blue Line Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Express and Blue Line
The main advantage of trading using opposite American Express and Blue Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Blue Line 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 Blue Line will offset losses from the drop in Blue Line'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 |
Blue Line vs. Seychelle Environmtl | Blue Line vs. Energy and Water | Blue Line vs. One World Universe | Blue Line vs. Vow ASA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |