Correlation Between American Express and AB Active
Can any of the company-specific risk be diversified away by investing in both American Express and AB Active 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 AB Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and AB Active ETFs,, you can compare the effects of market volatilities on American Express and AB Active 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 AB Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and AB Active.
Diversification Opportunities for American Express and AB Active
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and ILOW is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Express and AB Active ETFs, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Active ETFs, 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 AB Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Active ETFs, has no effect on the direction of American Express i.e., American Express and AB Active go up and down completely randomly.
Pair Corralation between American Express and AB Active
Considering the 90-day investment horizon American Express is expected to generate 2.8 times more return on investment than AB Active. However, American Express is 2.8 times more volatile than AB Active ETFs,. It trades about 0.28 of its potential returns per unit of risk. AB Active ETFs, is currently generating about -0.1 per unit of risk. If you would invest 27,043 in American Express on August 30, 2024 and sell it today you would earn a total of 3,382 from holding American Express or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. AB Active ETFs,
Performance |
| Timeline |
| American Express |
| AB Active ETFs, |
American Express and AB Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and AB Active
The main advantage of trading using opposite American Express and AB Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, AB Active 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 AB Active will offset losses from the drop in AB Active's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. Discover Financial Services |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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