Correlation Between American Express and Global Partner
Can any of the company-specific risk be diversified away by investing in both American Express and Global Partner 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 Global Partner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Global Partner Acquisition, you can compare the effects of market volatilities on American Express and Global Partner 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 Global Partner. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Global Partner.
Diversification Opportunities for American Express and Global Partner
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Global is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Global Partner Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partner Acqui 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 Global Partner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partner Acqui has no effect on the direction of American Express i.e., American Express and Global Partner go up and down completely randomly.
Pair Corralation between American Express and Global Partner
Considering the 90-day investment horizon American Express is expected to generate 109.92 times less return on investment than Global Partner. But when comparing it to its historical volatility, American Express is 76.69 times less risky than Global Partner. It trades about 0.09 of its potential returns per unit of risk. Global Partner Acquisition is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4.94 in Global Partner Acquisition on August 26, 2024 and sell it today you would lose (4.94) from holding Global Partner Acquisition or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 49.3% |
| Values | Daily Returns |
American Express vs. Global Partner Acquisition
Performance |
| Timeline |
| American Express |
| Global Partner Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and Global Partner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Global Partner
The main advantage of trading using opposite American Express and Global Partner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Global Partner 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 Global Partner will offset losses from the drop in Global Partner's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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