Correlation Between American Express and Mfs Value
Can any of the company-specific risk be diversified away by investing in both American Express and Mfs Value 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 Mfs Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Mfs Value Fund, you can compare the effects of market volatilities on American Express and Mfs Value 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 Mfs Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Mfs Value.
Diversification Opportunities for American Express and Mfs Value
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Mfs is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Mfs Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Value Fund 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 Mfs Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Value Fund has no effect on the direction of American Express i.e., American Express and Mfs Value go up and down completely randomly.
Pair Corralation between American Express and Mfs Value
Considering the 90-day investment horizon American Express is expected to generate 1.9 times more return on investment than Mfs Value. However, American Express is 1.9 times more volatile than Mfs Value Fund. It trades about 0.08 of its potential returns per unit of risk. Mfs Value Fund is currently generating about 0.03 per unit of risk. If you would invest 17,043 in American Express on November 27, 2024 and sell it today you would earn a total of 12,228 from holding American Express or generate 71.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Express vs. Mfs Value Fund
Performance |
| Timeline |
| American Express |
| Mfs Value Fund |
American Express and Mfs Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Mfs Value
The main advantage of trading using opposite American Express and Mfs Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Mfs Value 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 Mfs Value will offset losses from the drop in Mfs Value's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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