Correlation Between American Express and Alps/red Rocks
Can any of the company-specific risk be diversified away by investing in both American Express and Alps/red Rocks 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 Alps/red Rocks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Alpsred Rocks Listed, you can compare the effects of market volatilities on American Express and Alps/red Rocks 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 Alps/red Rocks. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Alps/red Rocks.
Diversification Opportunities for American Express and Alps/red Rocks
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Alps/red is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Alpsred Rocks Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpsred Rocks Listed 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 Alps/red Rocks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpsred Rocks Listed has no effect on the direction of American Express i.e., American Express and Alps/red Rocks go up and down completely randomly.
Pair Corralation between American Express and Alps/red Rocks
Considering the 90-day investment horizon American Express is expected to generate 1.9 times more return on investment than Alps/red Rocks. However, American Express is 1.9 times more volatile than Alpsred Rocks Listed. It trades about 0.17 of its potential returns per unit of risk. Alpsred Rocks Listed is currently generating about 0.14 per unit of risk. If you would invest 16,370 in American Express on August 24, 2024 and sell it today you would earn a total of 13,455 from holding American Express or generate 82.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Alpsred Rocks Listed
Performance |
| Timeline |
| American Express |
| Alpsred Rocks Listed |
American Express and Alps/red Rocks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Alps/red Rocks
The main advantage of trading using opposite American Express and Alps/red Rocks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Alps/red Rocks 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 Alps/red Rocks will offset losses from the drop in Alps/red Rocks' long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. SoFi Technologies | American Express vs. Coca Cola Consolidated |
| Alps/red Rocks vs. Invesco Vertible Securities | Alps/red Rocks vs. Allianzgi Convertible Income | Alps/red Rocks vs. Columbia Vertible Securities | Alps/red Rocks vs. Putnam Convertible Incm Gwth |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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