Correlation Between American Express and Novan
Can any of the company-specific risk be diversified away by investing in both American Express and Novan 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 Novan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Novan Inc, you can compare the effects of market volatilities on American Express and Novan 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 Novan. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Novan.
Diversification Opportunities for American Express and Novan
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Novan is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Novan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novan Inc 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 Novan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novan Inc has no effect on the direction of American Express i.e., American Express and Novan go up and down completely randomly.
Pair Corralation between American Express and Novan
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 | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
American Express vs. Novan Inc
Performance |
| Timeline |
| American Express |
| Novan Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and Novan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Novan
The main advantage of trading using opposite American Express and Novan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Novan 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 Novan will offset losses from the drop in Novan'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 |
| Novan vs. Tarsus Pharmaceuticals | Novan vs. Aldeyra | Novan vs. Travere Therapeutics | Novan vs. Eton Pharmaceuticals |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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