Correlation Between American Express and IMCD NV
Can any of the company-specific risk be diversified away by investing in both American Express and IMCD NV 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 IMCD NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and IMCD NV, you can compare the effects of market volatilities on American Express and IMCD NV 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 IMCD NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and IMCD NV.
Diversification Opportunities for American Express and IMCD NV
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and IMCD is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Express and IMCD NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMCD NV 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 IMCD NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMCD NV has no effect on the direction of American Express i.e., American Express and IMCD NV go up and down completely randomly.
Pair Corralation between American Express and IMCD NV
Considering the 90-day investment horizon American Express is expected to generate 0.74 times more return on investment than IMCD NV. However, American Express is 1.34 times less risky than IMCD NV. It trades about 0.23 of its potential returns per unit of risk. IMCD NV is currently generating about 0.09 per unit of risk. If you would invest 28,554 in American Express on September 19, 2024 and sell it today you would earn a total of 1,580 from holding American Express or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. IMCD NV
Performance |
| Timeline |
| American Express |
| IMCD NV |
American Express and IMCD NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and IMCD NV
The main advantage of trading using opposite American Express and IMCD NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, IMCD NV 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 IMCD NV will offset losses from the drop in IMCD NV's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Mastercard |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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