Correlation Between American Express and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both American Express and WisdomTree International 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 WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and WisdomTree International Quality, you can compare the effects of market volatilities on American Express and WisdomTree International 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 WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and WisdomTree International.
Diversification Opportunities for American Express and WisdomTree International
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and WisdomTree is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Express and WisdomTree International Quali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International 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 WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of American Express i.e., American Express and WisdomTree International go up and down completely randomly.
Pair Corralation between American Express and WisdomTree International
Considering the 90-day investment horizon American Express is expected to generate 1.79 times more return on investment than WisdomTree International. However, American Express is 1.79 times more volatile than WisdomTree International Quality. It trades about 0.09 of its potential returns per unit of risk. WisdomTree International Quality is currently generating about 0.04 per unit of risk. If you would invest 15,199 in American Express on August 24, 2024 and sell it today you would earn a total of 14,101 from holding American Express or generate 92.78% 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. WisdomTree International Quali
Performance |
| Timeline |
| American Express |
| WisdomTree International |
American Express and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and WisdomTree International
The main advantage of trading using opposite American Express and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, WisdomTree International 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 WisdomTree International will offset losses from the drop in WisdomTree International's long position.| American Express vs. Small Cap Core | American Express vs. Morningstar Unconstrained Allocation | American Express vs. Mutual Of America | American Express vs. Ep Emerging Markets |
| WisdomTree International vs. Invesco DWA Emerging | WisdomTree International vs. Invesco DWA Momentum | WisdomTree International vs. Invesco DWA SmallCap | WisdomTree International vs. Invesco FTSE RAFI |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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