Correlation Between American Express and Deutsche California
Can any of the company-specific risk be diversified away by investing in both American Express and Deutsche California 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 Deutsche California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Deutsche California Tax Free, you can compare the effects of market volatilities on American Express and Deutsche California 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 Deutsche California. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Deutsche California.
Diversification Opportunities for American Express and Deutsche California
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Deutsche is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Deutsche California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche California Tax 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 Deutsche California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche California Tax has no effect on the direction of American Express i.e., American Express and Deutsche California go up and down completely randomly.
Pair Corralation between American Express and Deutsche California
Considering the 90-day investment horizon American Express is expected to generate 5.31 times more return on investment than Deutsche California. However, American Express is 5.31 times more volatile than Deutsche California Tax Free. It trades about 0.17 of its potential returns per unit of risk. Deutsche California Tax Free is currently generating about -0.06 per unit of risk. If you would invest 27,049 in American Express on August 29, 2024 and sell it today you would earn a total of 3,392 from holding American Express or generate 12.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
American Express vs. Deutsche California Tax Free
Performance |
| Timeline |
| American Express |
| Deutsche California Tax |
American Express and Deutsche California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Deutsche California
The main advantage of trading using opposite American Express and Deutsche California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Deutsche California 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 Deutsche California will offset losses from the drop in Deutsche California's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. Discover Financial Services |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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