Correlation Between American Express and 1st Prestige
Can any of the company-specific risk be diversified away by investing in both American Express and 1st Prestige 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 1st Prestige into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and 1st Prestige Wealth, you can compare the effects of market volatilities on American Express and 1st Prestige 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 1st Prestige. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and 1st Prestige.
Diversification Opportunities for American Express and 1st Prestige
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and 1st is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding American Express and 1st Prestige Wealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Prestige Wealth 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 1st Prestige. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Prestige Wealth has no effect on the direction of American Express i.e., American Express and 1st Prestige go up and down completely randomly.
Pair Corralation between American Express and 1st Prestige
Considering the 90-day investment horizon American Express is expected to generate 0.1 times more return on investment than 1st Prestige. However, American Express is 10.0 times less risky than 1st Prestige. It trades about 0.29 of its potential returns per unit of risk. 1st Prestige Wealth is currently generating about -0.21 per unit of risk. If you would invest 27,147 in American Express on August 29, 2024 and sell it today you would earn a total of 3,410 from holding American Express or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. 1st Prestige Wealth
Performance |
| Timeline |
| American Express |
| 1st Prestige Wealth |
American Express and 1st Prestige Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and 1st Prestige
The main advantage of trading using opposite American Express and 1st Prestige positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, 1st Prestige 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 1st Prestige will offset losses from the drop in 1st Prestige's long position.| American Express vs. Orix Corp Ads | American Express vs. Medallion Financial Corp | American Express vs. Oportun Financial Corp | American Express vs. SLM Corp Pb |
| 1st Prestige vs. Invesco High Income | 1st Prestige vs. Blackrock Muniholdings Ny | 1st Prestige vs. MFS Investment Grade | 1st Prestige vs. Federated Premier Municipal |
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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