Correlation Between American Express and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both American Express and SPDR Galaxy 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 SPDR Galaxy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and SPDR Galaxy Digital, you can compare the effects of market volatilities on American Express and SPDR Galaxy 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 SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and SPDR Galaxy.
Diversification Opportunities for American Express and SPDR Galaxy
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and SPDR is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding American Express and SPDR Galaxy Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Digital 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 SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Digital has no effect on the direction of American Express i.e., American Express and SPDR Galaxy go up and down completely randomly.
Pair Corralation between American Express and SPDR Galaxy
Considering the 90-day investment horizon American Express is expected to generate 0.44 times more return on investment than SPDR Galaxy. However, American Express is 2.28 times less risky than SPDR Galaxy. It trades about -0.26 of its potential returns per unit of risk. SPDR Galaxy Digital is currently generating about -0.35 per unit of risk. If you would invest 31,653 in American Express on December 4, 2024 and sell it today you would lose (2,104) from holding American Express or give up 6.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Express vs. SPDR Galaxy Digital
Performance |
| Timeline |
| American Express |
| SPDR Galaxy Digital |
American Express and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and SPDR Galaxy
The main advantage of trading using opposite American Express and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, SPDR Galaxy 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 SPDR Galaxy will offset losses from the drop in SPDR Galaxy's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
| SPDR Galaxy vs. Strategy Shares | SPDR Galaxy vs. Freedom Day Dividend | SPDR Galaxy vs. Franklin Templeton ETF | SPDR Galaxy vs. iShares MSCI China |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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