Correlation Between American Express and Eduxx
Can any of the company-specific risk be diversified away by investing in both American Express and Eduxx 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 Eduxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Eduxx, you can compare the effects of market volatilities on American Express and Eduxx 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 Eduxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Eduxx.
Diversification Opportunities for American Express and Eduxx
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Eduxx is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Eduxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eduxx 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 Eduxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eduxx has no effect on the direction of American Express i.e., American Express and Eduxx go up and down completely randomly.
Pair Corralation between American Express and Eduxx
Considering the 90-day investment horizon American Express is expected to generate 25.13 times less return on investment than Eduxx. But when comparing it to its historical volatility, American Express is 54.57 times less risky than Eduxx. It trades about 0.24 of its potential returns per unit of risk. Eduxx is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 436.00 in Eduxx on October 23, 2024 and sell it today you would lose (336.00) from holding Eduxx or give up 77.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Eduxx
Performance |
| Timeline |
| American Express |
| Eduxx |
American Express and Eduxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Eduxx
The main advantage of trading using opposite American Express and Eduxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Eduxx 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 Eduxx will offset losses from the drop in Eduxx's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. MSCI ACWI exAUCONSUMER | American Express vs. Sycamore Entmt Grp |
| Eduxx vs. Vanguard Total Stock | Eduxx vs. Vanguard 500 Index | Eduxx vs. Vanguard Total Stock | Eduxx vs. Vanguard Total Stock |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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