Correlation Between American Express and Hinto Energy
Can any of the company-specific risk be diversified away by investing in both American Express and Hinto Energy 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 Hinto Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Hinto Energy, you can compare the effects of market volatilities on American Express and Hinto Energy 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 Hinto Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Hinto Energy.
Diversification Opportunities for American Express and Hinto Energy
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Hinto is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Hinto Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hinto Energy 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 Hinto Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hinto Energy has no effect on the direction of American Express i.e., American Express and Hinto Energy go up and down completely randomly.
Pair Corralation between American Express and Hinto Energy
Considering the 90-day investment horizon American Express is expected to generate 1.06 times less return on investment than Hinto Energy. But when comparing it to its historical volatility, American Express is 8.74 times less risky than Hinto Energy. It trades about 0.1 of its potential returns per unit of risk. Hinto Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Hinto Energy on November 30, 2024 and sell it today you would lose (21.65) from holding Hinto Energy or give up 94.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
American Express vs. Hinto Energy
Performance |
| Timeline |
| American Express |
| Hinto Energy |
American Express and Hinto Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Hinto Energy
The main advantage of trading using opposite American Express and Hinto Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Hinto Energy 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 Hinto Energy will offset losses from the drop in Hinto Energy's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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