Correlation Between American Express and Delaware Wealth
Can any of the company-specific risk be diversified away by investing in both American Express and Delaware Wealth 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 Delaware Wealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Delaware Wealth Builder, you can compare the effects of market volatilities on American Express and Delaware Wealth 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 Delaware Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Delaware Wealth.
Diversification Opportunities for American Express and Delaware Wealth
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Delaware is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Delaware Wealth Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Wealth Builder 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 Delaware Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Wealth Builder has no effect on the direction of American Express i.e., American Express and Delaware Wealth go up and down completely randomly.
Pair Corralation between American Express and Delaware Wealth
Considering the 90-day investment horizon American Express is expected to generate 4.29 times more return on investment than Delaware Wealth. However, American Express is 4.29 times more volatile than Delaware Wealth Builder. It trades about 0.25 of its potential returns per unit of risk. Delaware Wealth Builder is currently generating about 0.18 per unit of risk. If you would invest 27,408 in American Express on August 31, 2024 and sell it today you would earn a total of 3,017 from holding American Express or generate 11.01% 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. Delaware Wealth Builder
Performance |
| Timeline |
| American Express |
| Delaware Wealth Builder |
American Express and Delaware Wealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Delaware Wealth
The main advantage of trading using opposite American Express and Delaware Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Delaware Wealth 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 Delaware Wealth will offset losses from the drop in Delaware Wealth's long position.| American Express vs. Visa Class A | American Express vs. RLJ Lodging Trust | American Express vs. Aquagold International | American Express vs. Stepstone Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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