Correlation Between American Express and Green Dot
Can any of the company-specific risk be diversified away by investing in both American Express and Green Dot 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 Green Dot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Green Dot, you can compare the effects of market volatilities on American Express and Green Dot 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 Green Dot. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Green Dot.
Diversification Opportunities for American Express and Green Dot
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Green is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Green Dot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Dot 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 Green Dot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Dot has no effect on the direction of American Express i.e., American Express and Green Dot go up and down completely randomly.
Pair Corralation between American Express and Green Dot
Considering the 90-day investment horizon American Express is expected to generate 0.36 times more return on investment than Green Dot. However, American Express is 2.77 times less risky than Green Dot. It trades about 0.29 of its potential returns per unit of risk. Green Dot is currently generating about -0.07 per unit of risk. If you would invest 26,735 in American Express on August 26, 2024 and sell it today you would earn a total of 3,395 from holding American Express or generate 12.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Green Dot
Performance |
| Timeline |
| American Express |
| Green Dot |
American Express and Green Dot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Green Dot
The main advantage of trading using opposite American Express and Green Dot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Green Dot 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 Green Dot will offset losses from the drop in Green Dot's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| Green Dot vs. Guidewire Software | Green Dot vs. Envestnet | Green Dot vs. Evertec | Green Dot vs. Axos Financial |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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