Correlation Between American Express and Pacer Benchmark
Can any of the company-specific risk be diversified away by investing in both American Express and Pacer Benchmark 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 Pacer Benchmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Pacer Benchmark Industrial, you can compare the effects of market volatilities on American Express and Pacer Benchmark 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 Pacer Benchmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Pacer Benchmark.
Diversification Opportunities for American Express and Pacer Benchmark
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Pacer is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Pacer Benchmark Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Indu 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 Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Indu has no effect on the direction of American Express i.e., American Express and Pacer Benchmark go up and down completely randomly.
Pair Corralation between American Express and Pacer Benchmark
Considering the 90-day investment horizon American Express is expected to generate 1.92 times more return on investment than Pacer Benchmark. However, American Express is 1.92 times more volatile than Pacer Benchmark Industrial. It trades about 0.29 of its potential returns per unit of risk. Pacer Benchmark Industrial is currently generating about -0.13 per unit of risk. If you would invest 26,735 in American Express on August 26, 2024 and sell it today you would earn a total of 3,395 from holding American Express or generate 12.7% 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. Pacer Benchmark Industrial
Performance |
| Timeline |
| American Express |
| Pacer Benchmark Indu |
American Express and Pacer Benchmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Pacer Benchmark
The main advantage of trading using opposite American Express and Pacer Benchmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Pacer Benchmark 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 Pacer Benchmark will offset losses from the drop in Pacer Benchmark's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| Pacer Benchmark vs. Pacer Benchmark Data | Pacer Benchmark vs. US Diversified Real | Pacer Benchmark vs. Nuveen Short Term REIT |
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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