Correlation Between American Express and Horizon Pharma
Can any of the company-specific risk be diversified away by investing in both American Express and Horizon Pharma 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 Horizon Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Horizon Pharma PLC, you can compare the effects of market volatilities on American Express and Horizon Pharma 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 Horizon Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Horizon Pharma.
Diversification Opportunities for American Express and Horizon Pharma
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Horizon is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Horizon Pharma PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Pharma PLC 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 Horizon Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Pharma PLC has no effect on the direction of American Express i.e., American Express and Horizon Pharma go up and down completely randomly.
Pair Corralation between American Express and Horizon Pharma
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 Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
American Express vs. Horizon Pharma PLC
Performance |
| Timeline |
| American Express |
| Horizon Pharma PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and Horizon Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Horizon Pharma
The main advantage of trading using opposite American Express and Horizon Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Horizon Pharma 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 Horizon Pharma will offset losses from the drop in Horizon Pharma's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| Horizon Pharma vs. Bristol Myers Squibb | Horizon Pharma vs. AbbVie Inc | Horizon Pharma vs. Merck Company | Horizon Pharma vs. Gilead Sciences |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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