Correlation Between American Express and American Century
Can any of the company-specific risk be diversified away by investing in both American Express and American Century 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 American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and American Century ETF, you can compare the effects of market volatilities on American Express and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and American Century.
Diversification Opportunities for American Express and American Century
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Express and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of American Express i.e., American Express and American Century go up and down completely randomly.
Pair Corralation between American Express and American Century
Considering the 90-day investment horizon American Express is expected to generate 45.27 times more return on investment than American Century. However, American Express is 45.27 times more volatile than American Century ETF. It trades about 0.3 of its potential returns per unit of risk. American Century ETF is currently generating about 0.35 per unit of risk. If you would invest 27,008 in American Express on September 1, 2024 and sell it today you would earn a total of 3,460 from holding American Express or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Express vs. American Century ETF
Performance |
| Timeline |
| American Express |
| American Century ETF |
American Express and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and American Century
The main advantage of trading using opposite American Express and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| American Century vs. Valued Advisers Trust | American Century vs. Columbia Diversified Fixed | American Century vs. Principal Exchange Traded Funds | American Century vs. Doubleline Etf Trust |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |