Correlation Between American Express and Marine Bancorp
Can any of the company-specific risk be diversified away by investing in both American Express and Marine Bancorp 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 Marine Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Marine Bancorp of, you can compare the effects of market volatilities on American Express and Marine Bancorp 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 Marine Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Marine Bancorp.
Diversification Opportunities for American Express and Marine Bancorp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Marine is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Marine Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Bancorp 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 Marine Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Bancorp has no effect on the direction of American Express i.e., American Express and Marine Bancorp go up and down completely randomly.
Pair Corralation between American Express and Marine Bancorp
Considering the 90-day investment horizon American Express is expected to generate 19.79 times more return on investment than Marine Bancorp. However, American Express is 19.79 times more volatile than Marine Bancorp of. It trades about 0.19 of its potential returns per unit of risk. Marine Bancorp of is currently generating about 0.22 per unit of risk. If you would invest 28,851 in American Express on September 13, 2024 and sell it today you would earn a total of 1,286 from holding American Express or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Express vs. Marine Bancorp of
Performance |
| Timeline |
| American Express |
| Marine Bancorp |
American Express and Marine Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Marine Bancorp
The main advantage of trading using opposite American Express and Marine Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Marine Bancorp 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 Marine Bancorp will offset losses from the drop in Marine Bancorp's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Upstart Holdings | American Express vs. Mastercard |
| Marine Bancorp vs. Cheniere Energy Partners | Marine Bancorp vs. Mayfair Gold Corp | Marine Bancorp vs. Zhihu Inc ADR | Marine Bancorp vs. Grupo Aeroportuario del |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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