Correlation Between American Express and G Medical
Can any of the company-specific risk be diversified away by investing in both American Express and G Medical 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 G Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and G Medical Innovations, you can compare the effects of market volatilities on American Express and G Medical 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 G Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and G Medical.
Diversification Opportunities for American Express and G Medical
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and GMVDW is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Express and G Medical Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Medical Innovations 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 G Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Medical Innovations has no effect on the direction of American Express i.e., American Express and G Medical go up and down completely randomly.
Pair Corralation between American Express and G Medical
Considering the 90-day investment horizon American Express is expected to generate 54.62 times less return on investment than G Medical. But when comparing it to its historical volatility, American Express is 41.58 times less risky than G Medical. It trades about 0.09 of its potential returns per unit of risk. G Medical Innovations is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 167.00 in G Medical Innovations on September 3, 2024 and sell it today you would earn a total of 234.00 from holding G Medical Innovations or generate 140.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 24.65% |
| Values | Daily Returns |
American Express vs. G Medical Innovations
Performance |
| Timeline |
| American Express |
| G Medical Innovations |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and G Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and G Medical
The main advantage of trading using opposite American Express and G Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, G Medical 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 G Medical will offset losses from the drop in G Medical's long position.| American Express vs. Highway Holdings Limited | American Express vs. QCR Holdings | American Express vs. Partner Communications | American Express vs. Acumen Pharmaceuticals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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