Correlation Between American Express and Orbia AdvanceSAB
Can any of the company-specific risk be diversified away by investing in both American Express and Orbia AdvanceSAB 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 Orbia AdvanceSAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Orbia Advance, you can compare the effects of market volatilities on American Express and Orbia AdvanceSAB 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 Orbia AdvanceSAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Orbia AdvanceSAB.
Diversification Opportunities for American Express and Orbia AdvanceSAB
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Orbia is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Orbia Advance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbia AdvanceSAB 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 Orbia AdvanceSAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbia AdvanceSAB has no effect on the direction of American Express i.e., American Express and Orbia AdvanceSAB go up and down completely randomly.
Pair Corralation between American Express and Orbia AdvanceSAB
Considering the 90-day investment horizon American Express is expected to generate 0.86 times more return on investment than Orbia AdvanceSAB. However, American Express is 1.16 times less risky than Orbia AdvanceSAB. It trades about 0.32 of its potential returns per unit of risk. Orbia Advance is currently generating about 0.04 per unit of risk. If you would invest 27,019 in American Express on September 3, 2024 and sell it today you would earn a total of 3,449 from holding American Express or generate 12.77% 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. Orbia Advance
Performance |
| Timeline |
| American Express |
| Orbia AdvanceSAB |
American Express and Orbia AdvanceSAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Orbia AdvanceSAB
The main advantage of trading using opposite American Express and Orbia AdvanceSAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Orbia AdvanceSAB 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 Orbia AdvanceSAB will offset losses from the drop in Orbia AdvanceSAB's long position.| American Express vs. Highway Holdings Limited | American Express vs. QCR Holdings | American Express vs. Partner Communications | American Express vs. Acumen Pharmaceuticals |
| Orbia AdvanceSAB vs. Solvay SA ADR | Orbia AdvanceSAB vs. Dow Inc | Orbia AdvanceSAB vs. Shin Etsu Chemical Co | Orbia AdvanceSAB vs. First Graphene |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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