Correlation Between American Express and VanEck Video
Can any of the company-specific risk be diversified away by investing in both American Express and VanEck Video 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 VanEck Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and VanEck Video Gaming, you can compare the effects of market volatilities on American Express and VanEck Video 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 VanEck Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and VanEck Video.
Diversification Opportunities for American Express and VanEck Video
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and VanEck is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Express and VanEck Video Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Video Gaming 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 VanEck Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Video Gaming has no effect on the direction of American Express i.e., American Express and VanEck Video go up and down completely randomly.
Pair Corralation between American Express and VanEck Video
Considering the 90-day investment horizon American Express is expected to under-perform the VanEck Video. But the stock apears to be less risky and, when comparing its historical volatility, American Express is 1.16 times less risky than VanEck Video. The stock trades about -0.02 of its potential returns per unit of risk. The VanEck Video Gaming is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 8,395 in VanEck Video Gaming on November 18, 2024 and sell it today you would earn a total of 1,129 from holding VanEck Video Gaming or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. VanEck Video Gaming
Performance |
| Timeline |
| American Express |
| VanEck Video Gaming |
American Express and VanEck Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and VanEck Video
The main advantage of trading using opposite American Express and VanEck Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, VanEck Video 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 VanEck Video will offset losses from the drop in VanEck Video'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 |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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