Correlation Between American Express and Themes Natural
Can any of the company-specific risk be diversified away by investing in both American Express and Themes Natural 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 Themes Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Themes Natural Monopoly, you can compare the effects of market volatilities on American Express and Themes Natural 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 Themes Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Themes Natural.
Diversification Opportunities for American Express and Themes Natural
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Themes is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Themes Natural Monopoly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Natural Monopoly 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 Themes Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Natural Monopoly has no effect on the direction of American Express i.e., American Express and Themes Natural go up and down completely randomly.
Pair Corralation between American Express and Themes Natural
Considering the 90-day investment horizon American Express is expected to generate 1.74 times more return on investment than Themes Natural. However, American Express is 1.74 times more volatile than Themes Natural Monopoly. It trades about 0.13 of its potential returns per unit of risk. Themes Natural Monopoly is currently generating about 0.11 per unit of risk. If you would invest 23,556 in American Express on September 1, 2024 and sell it today you would earn a total of 6,912 from holding American Express or generate 29.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Express vs. Themes Natural Monopoly
Performance |
| Timeline |
| American Express |
| Themes Natural Monopoly |
American Express and Themes Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Themes Natural
The main advantage of trading using opposite American Express and Themes Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Themes Natural 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 Themes Natural will offset losses from the drop in Themes Natural's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Themes Natural vs. Vanguard Total Stock | Themes Natural vs. SPDR SP 500 | Themes Natural vs. iShares Core SP | Themes Natural vs. Vanguard Dividend Appreciation |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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