Correlation Between American Express and Cactus Acquisition
Can any of the company-specific risk be diversified away by investing in both American Express and Cactus Acquisition 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 Cactus Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Cactus Acquisition Corp, you can compare the effects of market volatilities on American Express and Cactus Acquisition 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 Cactus Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Cactus Acquisition.
Diversification Opportunities for American Express and Cactus Acquisition
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Cactus is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Cactus Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Acquisition Corp 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 Cactus Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Acquisition Corp has no effect on the direction of American Express i.e., American Express and Cactus Acquisition go up and down completely randomly.
Pair Corralation between American Express and Cactus Acquisition
Considering the 90-day investment horizon American Express is expected to generate 0.43 times more return on investment than Cactus Acquisition. However, American Express is 2.33 times less risky than Cactus Acquisition. It trades about 0.3 of its potential returns per unit of risk. Cactus Acquisition Corp is currently generating about 0.0 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Cactus Acquisition Corp
Performance |
| Timeline |
| American Express |
| Cactus Acquisition Corp |
American Express and Cactus Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Cactus Acquisition
The main advantage of trading using opposite American Express and Cactus Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Cactus Acquisition 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 Cactus Acquisition will offset losses from the drop in Cactus Acquisition's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |