Correlation Between American Express and Mint
Can any of the company-specific risk be diversified away by investing in both American Express and Mint 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 Mint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and The Mint, you can compare the effects of market volatilities on American Express and Mint 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 Mint. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Mint.
Diversification Opportunities for American Express and Mint
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Mint is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding American Express and The Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mint 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 Mint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mint has no effect on the direction of American Express i.e., American Express and Mint go up and down completely randomly.
Pair Corralation between American Express and Mint
Considering the 90-day investment horizon American Express is expected to generate 17.89 times less return on investment than Mint. But when comparing it to its historical volatility, American Express is 25.52 times less risky than Mint. It trades about 0.19 of its potential returns per unit of risk. The Mint is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.93 in The Mint on September 14, 2024 and sell it today you would earn a total of 0.07 from holding The Mint or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
American Express vs. The Mint
Performance |
| Timeline |
| American Express |
| Mint |
American Express and Mint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Mint
The main advantage of trading using opposite American Express and Mint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Mint 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 Mint will offset losses from the drop in Mint's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Upstart Holdings | American Express vs. Mastercard |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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