Correlation Between American Express and Transamerica Funds
Can any of the company-specific risk be diversified away by investing in both American Express and Transamerica Funds 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 Transamerica Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Transamerica Funds , you can compare the effects of market volatilities on American Express and Transamerica Funds 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 Transamerica Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Transamerica Funds.
Diversification Opportunities for American Express and Transamerica Funds
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Transamerica is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Transamerica Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Funds 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 Transamerica Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Funds has no effect on the direction of American Express i.e., American Express and Transamerica Funds go up and down completely randomly.
Pair Corralation between American Express and Transamerica Funds
Considering the 90-day investment horizon American Express is expected to generate 12.79 times more return on investment than Transamerica Funds. However, American Express is 12.79 times more volatile than Transamerica Funds . It trades about 0.14 of its potential returns per unit of risk. Transamerica Funds is currently generating about 0.13 per unit of risk. If you would invest 23,338 in American Express on September 3, 2024 and sell it today you would earn a total of 7,130 from holding American Express or generate 30.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Transamerica Funds
Performance |
| Timeline |
| American Express |
| Transamerica Funds |
American Express and Transamerica Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Transamerica Funds
The main advantage of trading using opposite American Express and Transamerica Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Transamerica Funds 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 Transamerica Funds will offset losses from the drop in Transamerica Funds' long position.| American Express vs. Highway Holdings Limited | American Express vs. QCR Holdings | American Express vs. Partner Communications | American Express vs. Acumen Pharmaceuticals |
| Transamerica Funds vs. Goldman Sachs Financial | Transamerica Funds vs. John Hancock Financial | Transamerica Funds vs. Davis Financial Fund | Transamerica Funds vs. Fidelity Advisor Financial |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |