Correlation Between American Express and Crescent Point
Can any of the company-specific risk be diversified away by investing in both American Express and Crescent Point 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 Crescent Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Crescent Point Energy, you can compare the effects of market volatilities on American Express and Crescent Point 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 Crescent Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Crescent Point.
Diversification Opportunities for American Express and Crescent Point
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Crescent is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Crescent Point Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Point Energy 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 Crescent Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Point Energy has no effect on the direction of American Express i.e., American Express and Crescent Point go up and down completely randomly.
Pair Corralation between American Express and Crescent Point
Considering the 90-day investment horizon American Express is expected to generate 0.69 times more return on investment than Crescent Point. However, American Express is 1.45 times less risky than Crescent Point. It trades about 0.1 of its potential returns per unit of risk. Crescent Point Energy is currently generating about 0.04 per unit of risk. If you would invest 15,064 in American Express on August 27, 2024 and sell it today you would earn a total of 15,066 from holding American Express or generate 100.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.45% |
| Values | Daily Returns |
American Express vs. Crescent Point Energy
Performance |
| Timeline |
| American Express |
| Crescent Point Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and Crescent Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Crescent Point
The main advantage of trading using opposite American Express and Crescent Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Crescent Point 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 Crescent Point will offset losses from the drop in Crescent Point's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| Crescent Point vs. Vermilion Energy | Crescent Point vs. Canadian Natural Resources | Crescent Point vs. Baytex Energy Corp | Crescent Point vs. Ovintiv |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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