Correlation Between American Express and MOL PLC
Can any of the company-specific risk be diversified away by investing in both American Express and MOL PLC 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 MOL PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and MOL PLC ADR, you can compare the effects of market volatilities on American Express and MOL PLC 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 MOL PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and MOL PLC.
Diversification Opportunities for American Express and MOL PLC
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and MOL is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding American Express and MOL PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL PLC ADR 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 MOL PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL PLC ADR has no effect on the direction of American Express i.e., American Express and MOL PLC go up and down completely randomly.
Pair Corralation between American Express and MOL PLC
Considering the 90-day investment horizon American Express is expected to generate 1.19 times more return on investment than MOL PLC. However, American Express is 1.19 times more volatile than MOL PLC ADR. It trades about 0.25 of its potential returns per unit of risk. MOL PLC ADR is currently generating about -0.01 per unit of risk. If you would invest 27,408 in American Express on August 31, 2024 and sell it today you would earn a total of 3,017 from holding American Express or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. MOL PLC ADR
Performance |
| Timeline |
| American Express |
| MOL PLC ADR |
American Express and MOL PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and MOL PLC
The main advantage of trading using opposite American Express and MOL PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, MOL PLC 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 MOL PLC will offset losses from the drop in MOL PLC's long position.| American Express vs. Visa Class A | American Express vs. RLJ Lodging Trust | American Express vs. Aquagold International | American Express vs. Stepstone Group |
| MOL PLC vs. Equinor ASA ADR | MOL PLC vs. TotalEnergies SE ADR | MOL PLC vs. Ecopetrol SA ADR | MOL PLC vs. National Fuel Gas |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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