Correlation Between American Express and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both American Express and Cornerstone Strategic 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 Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Cornerstone Strategic Return, you can compare the effects of market volatilities on American Express and Cornerstone Strategic 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 Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Cornerstone Strategic.
Diversification Opportunities for American Express and Cornerstone Strategic
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Cornerstone is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Cornerstone Strategic Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic 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 Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of American Express i.e., American Express and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between American Express and Cornerstone Strategic
Considering the 90-day investment horizon American Express is expected to generate 1.88 times more return on investment than Cornerstone Strategic. However, American Express is 1.88 times more volatile than Cornerstone Strategic Return. It trades about 0.29 of its potential returns per unit of risk. Cornerstone Strategic Return is currently generating about 0.43 per unit of risk. If you would invest 27,147 in American Express on August 28, 2024 and sell it today you would earn a total of 3,374 from holding American Express or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Cornerstone Strategic Return
Performance |
| Timeline |
| American Express |
| Cornerstone Strategic |
American Express and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Cornerstone Strategic
The main advantage of trading using opposite American Express and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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