Correlation Between American Express and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both American Express and Hennessy Cornerstone 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 Hennessy Cornerstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Hennessy Nerstone Value, you can compare the effects of market volatilities on American Express and Hennessy Cornerstone 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 Hennessy Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Hennessy Cornerstone.
Diversification Opportunities for American Express and Hennessy Cornerstone
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Hennessy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Hennessy Nerstone Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Value 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 Hennessy Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Value has no effect on the direction of American Express i.e., American Express and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between American Express and Hennessy Cornerstone
Considering the 90-day investment horizon American Express is expected to generate 3.24 times more return on investment than Hennessy Cornerstone. However, American Express is 3.24 times more volatile than Hennessy Nerstone Value. It trades about 0.29 of its potential returns per unit of risk. Hennessy Nerstone Value is currently generating about 0.18 per unit of risk. If you would invest 27,147 in American Express on August 28, 2024 and sell it today you would earn a total of 3,374 from holding American Express or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Hennessy Nerstone Value
Performance |
| Timeline |
| American Express |
| Hennessy Nerstone Value |
American Express and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Hennessy Cornerstone
The main advantage of trading using opposite American Express and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Hennessy Cornerstone 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 Hennessy Cornerstone will offset losses from the drop in Hennessy Cornerstone's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| Hennessy Cornerstone vs. Hennessy Nerstone Growth | Hennessy Cornerstone vs. Hennessy Nerstone Mid | Hennessy Cornerstone vs. Hennessy Large Cap | Hennessy Cornerstone vs. Hennessy Nerstone Large |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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