Correlation Between American Express and DMY Squared
Can any of the company-specific risk be diversified away by investing in both American Express and DMY Squared 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 DMY Squared into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and dMY Squared Technology, you can compare the effects of market volatilities on American Express and DMY Squared 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 DMY Squared. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and DMY Squared.
Diversification Opportunities for American Express and DMY Squared
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and DMY is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding American Express and dMY Squared Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dMY Squared Technology 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 DMY Squared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dMY Squared Technology has no effect on the direction of American Express i.e., American Express and DMY Squared go up and down completely randomly.
Pair Corralation between American Express and DMY Squared
Considering the 90-day investment horizon American Express is expected to generate 3.96 times more return on investment than DMY Squared. However, American Express is 3.96 times more volatile than dMY Squared Technology. It trades about 0.15 of its potential returns per unit of risk. dMY Squared Technology is currently generating about 0.0 per unit of risk. If you would invest 25,065 in American Express on August 23, 2024 and sell it today you would earn a total of 4,235 from holding American Express or generate 16.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. dMY Squared Technology
Performance |
| Timeline |
| American Express |
| dMY Squared Technology |
American Express and DMY Squared Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and DMY Squared
The main advantage of trading using opposite American Express and DMY Squared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, DMY Squared 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 DMY Squared will offset losses from the drop in DMY Squared's long position.| American Express vs. Small Cap Core | American Express vs. Morningstar Unconstrained Allocation | American Express vs. Mutual Of America | American Express vs. Ep Emerging Markets |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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