Correlation Between American Express and Jpmorgan Hedged
Can any of the company-specific risk be diversified away by investing in both American Express and Jpmorgan Hedged 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 Hedged 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 Hedged Equity, you can compare the effects of market volatilities on American Express and Jpmorgan Hedged 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 Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Jpmorgan Hedged.
Diversification Opportunities for American Express and Jpmorgan Hedged
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Jpmorgan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Jpmorgan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Hedged Equity 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 Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Hedged Equity has no effect on the direction of American Express i.e., American Express and Jpmorgan Hedged go up and down completely randomly.
Pair Corralation between American Express and Jpmorgan Hedged
Considering the 90-day investment horizon American Express is expected to generate 3.7 times more return on investment than Jpmorgan Hedged. However, American Express is 3.7 times more volatile than Jpmorgan Hedged Equity. It trades about 0.29 of its potential returns per unit of risk. Jpmorgan Hedged Equity is currently generating about 0.15 per unit of risk. If you would invest 27,147 in American Express on August 28, 2024 and sell it today you would earn a total of 3,374 from holding American Express or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Jpmorgan Hedged Equity
Performance |
| Timeline |
| American Express |
| Jpmorgan Hedged Equity |
American Express and Jpmorgan Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Jpmorgan Hedged
The main advantage of trading using opposite American Express and Jpmorgan Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Jpmorgan Hedged 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 Hedged will offset losses from the drop in Jpmorgan Hedged's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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