Correlation Between American Express and FP Newspapers
Can any of the company-specific risk be diversified away by investing in both American Express and FP Newspapers 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 FP Newspapers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and FP Newspapers, you can compare the effects of market volatilities on American Express and FP Newspapers 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 FP Newspapers. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and FP Newspapers.
Diversification Opportunities for American Express and FP Newspapers
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and FPNUF is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Express and FP Newspapers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FP Newspapers 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 FP Newspapers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FP Newspapers has no effect on the direction of American Express i.e., American Express and FP Newspapers go up and down completely randomly.
Pair Corralation between American Express and FP Newspapers
Considering the 90-day investment horizon American Express is expected to generate 0.25 times more return on investment than FP Newspapers. However, American Express is 4.0 times less risky than FP Newspapers. It trades about 0.09 of its potential returns per unit of risk. FP Newspapers is currently generating about -0.17 per unit of risk. If you would invest 30,140 in American Express on November 3, 2024 and sell it today you would earn a total of 1,605 from holding American Express or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
American Express vs. FP Newspapers
Performance |
| Timeline |
| American Express |
| FP Newspapers |
American Express and FP Newspapers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and FP Newspapers
The main advantage of trading using opposite American Express and FP Newspapers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, FP Newspapers 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 FP Newspapers will offset losses from the drop in FP Newspapers' long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| FP Newspapers vs. NETGEAR | FP Newspapers vs. Alto Neuroscience, | FP Newspapers vs. Lipocine | FP Newspapers vs. Centessa Pharmaceuticals PLC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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