Correlation Between American Express and Cargojet
Can any of the company-specific risk be diversified away by investing in both American Express and Cargojet 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 Cargojet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Cargojet, you can compare the effects of market volatilities on American Express and Cargojet 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 Cargojet. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Cargojet.
Diversification Opportunities for American Express and Cargojet
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Cargojet is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Cargojet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargojet 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 Cargojet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargojet has no effect on the direction of American Express i.e., American Express and Cargojet go up and down completely randomly.
Pair Corralation between American Express and Cargojet
Considering the 90-day investment horizon American Express is expected to generate 0.45 times more return on investment than Cargojet. However, American Express is 2.24 times less risky than Cargojet. It trades about -0.27 of its potential returns per unit of risk. Cargojet is currently generating about -0.3 per unit of risk. If you would invest 31,642 in American Express on November 28, 2024 and sell it today you would lose (2,032) from holding American Express or give up 6.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Cargojet
Performance |
| Timeline |
| American Express |
| Cargojet |
American Express and Cargojet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Cargojet
The main advantage of trading using opposite American Express and Cargojet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Cargojet 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 Cargojet will offset losses from the drop in Cargojet's long position.| American Express vs. LM Funding America | American Express vs. Eason Technology Limited | American Express vs. Nisun International Enterprise | American Express vs. Qudian Inc |
| Cargojet vs. Hub Group | Cargojet vs. Expeditors International of | Cargojet vs. JB Hunt Transport | Cargojet vs. CH Robinson Worldwide |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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