Correlation Between American Express and Lifestore Financial
Can any of the company-specific risk be diversified away by investing in both American Express and Lifestore Financial 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 Lifestore Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Lifestore Financial Group, you can compare the effects of market volatilities on American Express and Lifestore Financial 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 Lifestore Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Lifestore Financial.
Diversification Opportunities for American Express and Lifestore Financial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Lifestore is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Lifestore Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestore Financial 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 Lifestore Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestore Financial has no effect on the direction of American Express i.e., American Express and Lifestore Financial go up and down completely randomly.
Pair Corralation between American Express and Lifestore Financial
Considering the 90-day investment horizon American Express is expected to generate 0.54 times more return on investment than Lifestore Financial. However, American Express is 1.87 times less risky than Lifestore Financial. It trades about 0.1 of its potential returns per unit of risk. Lifestore Financial Group is currently generating about 0.01 per unit of risk. If you would invest 14,628 in American Express on September 5, 2024 and sell it today you would earn a total of 15,583 from holding American Express or generate 106.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.87% |
| Values | Daily Returns |
American Express vs. Lifestore Financial Group
Performance |
| Timeline |
| American Express |
| Lifestore Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and Lifestore Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Lifestore Financial
The main advantage of trading using opposite American Express and Lifestore Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Lifestore Financial 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 Lifestore Financial will offset losses from the drop in Lifestore Financial's long position.| American Express vs. 360 Finance | American Express vs. Enova International | American Express vs. Navient Corp | American Express vs. Sentage Holdings |
| Lifestore Financial vs. NETGEAR | Lifestore Financial vs. Marfrig Global Foods | Lifestore Financial vs. Bridgford Foods | Lifestore Financial vs. Uber Technologies |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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