Correlation Between American Express and Coastal Carolina
Can any of the company-specific risk be diversified away by investing in both American Express and Coastal Carolina 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 Coastal Carolina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Coastal Carolina Bancshares, you can compare the effects of market volatilities on American Express and Coastal Carolina 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 Coastal Carolina. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Coastal Carolina.
Diversification Opportunities for American Express and Coastal Carolina
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Coastal is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Coastal Carolina Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Carolina Ban 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 Coastal Carolina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Carolina Ban has no effect on the direction of American Express i.e., American Express and Coastal Carolina go up and down completely randomly.
Pair Corralation between American Express and Coastal Carolina
Considering the 90-day investment horizon American Express is expected to generate 1.42 times more return on investment than Coastal Carolina. However, American Express is 1.42 times more volatile than Coastal Carolina Bancshares. It trades about 0.3 of its potential returns per unit of risk. Coastal Carolina Bancshares is currently generating about 0.36 per unit of risk. If you would invest 27,008 in American Express on September 1, 2024 and sell it today you would earn a total of 3,460 from holding American Express or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Coastal Carolina Bancshares
Performance |
| Timeline |
| American Express |
| Coastal Carolina Ban |
American Express and Coastal Carolina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Coastal Carolina
The main advantage of trading using opposite American Express and Coastal Carolina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Coastal Carolina 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 Coastal Carolina will offset losses from the drop in Coastal Carolina's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Coastal Carolina vs. First Bankers Trustshares | Coastal Carolina vs. Greenville Federal Financial | Coastal Carolina vs. First Ottawa Bancshares | Coastal Carolina vs. Citizens Bancorp Investment |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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