Correlation Between American Express and Hino Motors
Can any of the company-specific risk be diversified away by investing in both American Express and Hino Motors 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 Hino Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Hino Motors Ltd, you can compare the effects of market volatilities on American Express and Hino Motors 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 Hino Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Hino Motors.
Diversification Opportunities for American Express and Hino Motors
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Hino is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Hino Motors Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hino Motors 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 Hino Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hino Motors has no effect on the direction of American Express i.e., American Express and Hino Motors go up and down completely randomly.
Pair Corralation between American Express and Hino Motors
Considering the 90-day investment horizon American Express is expected to generate 0.73 times more return on investment than Hino Motors. However, American Express is 1.36 times less risky than Hino Motors. It trades about 0.12 of its potential returns per unit of risk. Hino Motors Ltd is currently generating about -0.05 per unit of risk. If you would invest 16,785 in American Express on August 31, 2024 and sell it today you would earn a total of 13,683 from holding American Express or generate 81.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
American Express vs. Hino Motors Ltd
Performance |
| Timeline |
| American Express |
| Hino Motors |
American Express and Hino Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Hino Motors
The main advantage of trading using opposite American Express and Hino Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Hino Motors 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 Hino Motors will offset losses from the drop in Hino Motors' long position.| American Express vs. Visa Class A | American Express vs. RLJ Lodging Trust | American Express vs. Aquagold International | American Express vs. Stepstone Group |
| Hino Motors vs. Volkswagen AG 110 | Hino Motors vs. Stellantis NV | Hino Motors vs. Toyota Motor | Hino Motors vs. Honda Motor Co |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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