Correlation Between American Express and Gamehost
Can any of the company-specific risk be diversified away by investing in both American Express and Gamehost 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 Gamehost into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Gamehost, you can compare the effects of market volatilities on American Express and Gamehost 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 Gamehost. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Gamehost.
Diversification Opportunities for American Express and Gamehost
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Gamehost is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Gamehost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamehost 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 Gamehost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamehost has no effect on the direction of American Express i.e., American Express and Gamehost go up and down completely randomly.
Pair Corralation between American Express and Gamehost
Considering the 90-day investment horizon American Express is expected to generate 0.33 times more return on investment than Gamehost. However, American Express is 3.01 times less risky than Gamehost. It trades about 0.15 of its potential returns per unit of risk. Gamehost is currently generating about 0.05 per unit of risk. If you would invest 17,899 in American Express on November 9, 2024 and sell it today you would earn a total of 14,116 from holding American Express or generate 78.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 23.22% |
| Values | Daily Returns |
American Express vs. Gamehost
Performance |
| Timeline |
| American Express |
| Gamehost |
American Express and Gamehost Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Gamehost
The main advantage of trading using opposite American Express and Gamehost positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Gamehost 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 Gamehost will offset losses from the drop in Gamehost's long position.| American Express vs. Visa Class A | American Express vs. Great Western Minerals | American Express vs. Enterprise Bancorp | American Express vs. T Rowe Price |
| Gamehost vs. MagnaChip Semiconductor | Gamehost vs. Tower Semiconductor | Gamehost vs. BW Offshore Limited | Gamehost vs. Qorvo Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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