Correlation Between American Express and MusclePharm
Can any of the company-specific risk be diversified away by investing in both American Express and MusclePharm 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 MusclePharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and MusclePharm, you can compare the effects of market volatilities on American Express and MusclePharm 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 MusclePharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and MusclePharm.
Diversification Opportunities for American Express and MusclePharm
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and MusclePharm is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Express and MusclePharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MusclePharm 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 MusclePharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MusclePharm has no effect on the direction of American Express i.e., American Express and MusclePharm go up and down completely randomly.
Pair Corralation between American Express and MusclePharm
Considering the 90-day investment horizon American Express is expected to generate 42.42 times less return on investment than MusclePharm. But when comparing it to its historical volatility, American Express is 51.05 times less risky than MusclePharm. It trades about 0.1 of its potential returns per unit of risk. MusclePharm is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.05 in MusclePharm on September 3, 2024 and sell it today you would lose (0.05) from holding MusclePharm or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 88.89% |
| Values | Daily Returns |
American Express vs. MusclePharm
Performance |
| Timeline |
| American Express |
| MusclePharm |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and MusclePharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and MusclePharm
The main advantage of trading using opposite American Express and MusclePharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, MusclePharm 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 MusclePharm will offset losses from the drop in MusclePharm's long position.| American Express vs. Highway Holdings Limited | American Express vs. QCR Holdings | American Express vs. Partner Communications | American Express vs. Acumen Pharmaceuticals |
| MusclePharm vs. Merit Medical Systems | MusclePharm vs. Xunlei Ltd Adr | MusclePharm vs. Cumberland Pharmaceuticals | MusclePharm vs. Teleflex Incorporated |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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