Correlation Between American Express and JPMorgan Inflation
Can any of the company-specific risk be diversified away by investing in both American Express and JPMorgan Inflation 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 JPMorgan Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and JPMorgan Inflation Managed, you can compare the effects of market volatilities on American Express and JPMorgan Inflation 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 JPMorgan Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and JPMorgan Inflation.
Diversification Opportunities for American Express and JPMorgan Inflation
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and JPMorgan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Express and JPMorgan Inflation Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Inflation 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 JPMorgan Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Inflation has no effect on the direction of American Express i.e., American Express and JPMorgan Inflation go up and down completely randomly.
Pair Corralation between American Express and JPMorgan Inflation
Considering the 90-day investment horizon American Express is expected to generate 6.46 times more return on investment than JPMorgan Inflation. However, American Express is 6.46 times more volatile than JPMorgan Inflation Managed. It trades about 0.16 of its potential returns per unit of risk. JPMorgan Inflation Managed is currently generating about 0.11 per unit of risk. If you would invest 17,170 in American Express on August 27, 2024 and sell it today you would earn a total of 12,960 from holding American Express or generate 75.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. JPMorgan Inflation Managed
Performance |
| Timeline |
| American Express |
| JPMorgan Inflation |
American Express and JPMorgan Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and JPMorgan Inflation
The main advantage of trading using opposite American Express and JPMorgan Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, JPMorgan Inflation 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 JPMorgan Inflation will offset losses from the drop in JPMorgan Inflation's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| JPMorgan Inflation vs. Dimensional ETF Trust | JPMorgan Inflation vs. JPMorgan Short Duration | JPMorgan Inflation vs. Goldman Sachs Access | JPMorgan Inflation vs. SPDR Bloomberg 1 10 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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