Correlation Between American Express and Moelis
Can any of the company-specific risk be diversified away by investing in both American Express and Moelis 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 Moelis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Moelis Co, you can compare the effects of market volatilities on American Express and Moelis 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 Moelis. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Moelis.
Diversification Opportunities for American Express and Moelis
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Moelis is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Moelis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moelis 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 Moelis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moelis has no effect on the direction of American Express i.e., American Express and Moelis go up and down completely randomly.
Pair Corralation between American Express and Moelis
Considering the 90-day investment horizon American Express is expected to generate 0.64 times more return on investment than Moelis. However, American Express is 1.57 times less risky than Moelis. It trades about 0.15 of its potential returns per unit of risk. Moelis Co is currently generating about 0.09 per unit of risk. If you would invest 25,305 in American Express on November 2, 2024 and sell it today you would earn a total of 6,590 from holding American Express or generate 26.04% 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. Moelis Co
Performance |
| Timeline |
| American Express |
| Moelis |
American Express and Moelis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Moelis
The main advantage of trading using opposite American Express and Moelis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Moelis 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 Moelis will offset losses from the drop in Moelis' long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Mastercard |
| Moelis vs. PJT Partners | Moelis vs. Houlihan Lokey | Moelis vs. Piper Sandler Companies | Moelis vs. Perella Weinberg Partners |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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