Correlation Between American Express and Carlyle
Can any of the company-specific risk be diversified away by investing in both American Express and Carlyle 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 Carlyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Carlyle Group, you can compare the effects of market volatilities on American Express and Carlyle 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 Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Carlyle.
Diversification Opportunities for American Express and Carlyle
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Carlyle is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of American Express i.e., American Express and Carlyle go up and down completely randomly.
Pair Corralation between American Express and Carlyle
Considering the 90-day investment horizon American Express is expected to generate 0.7 times more return on investment than Carlyle. However, American Express is 1.43 times less risky than Carlyle. It trades about 0.15 of its potential returns per unit of risk. Carlyle Group is currently generating about 0.07 per unit of risk. If you would invest 17,899 in American Express on November 9, 2024 and sell it today you would earn a total of 14,116 from holding American Express or generate 78.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Express vs. Carlyle Group
Performance |
Timeline |
American Express |
Carlyle Group |
American Express and Carlyle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Express and Carlyle
The main advantage of trading using opposite American Express and Carlyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Carlyle 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 Carlyle will offset losses from the drop in Carlyle's long position.American Express vs. Visa Class A | American Express vs. Great Western Minerals | American Express vs. Enterprise Bancorp | American Express vs. T Rowe Price |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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