Correlation Between American Express and Newport Exploration
Can any of the company-specific risk be diversified away by investing in both American Express and Newport Exploration 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 Newport Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Newport Exploration, you can compare the effects of market volatilities on American Express and Newport Exploration 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 Newport Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Newport Exploration.
Diversification Opportunities for American Express and Newport Exploration
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Newport is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Newport Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newport Exploration 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 Newport Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newport Exploration has no effect on the direction of American Express i.e., American Express and Newport Exploration go up and down completely randomly.
Pair Corralation between American Express and Newport Exploration
Considering the 90-day investment horizon American Express is expected to generate 0.42 times more return on investment than Newport Exploration. However, American Express is 2.39 times less risky than Newport Exploration. It trades about 0.28 of its potential returns per unit of risk. Newport Exploration is currently generating about -0.09 per unit of risk. If you would invest 27,019 in American Express on September 4, 2024 and sell it today you would earn a total of 3,207 from holding American Express or generate 11.87% 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. Newport Exploration
Performance |
| Timeline |
| American Express |
| Newport Exploration |
American Express and Newport Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Newport Exploration
The main advantage of trading using opposite American Express and Newport Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Newport Exploration 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 Newport Exploration will offset losses from the drop in Newport Exploration's long position.| American Express vs. 360 Finance | American Express vs. Enova International | American Express vs. X Financial Class | American Express vs. LendingClub Corp |
| Newport Exploration vs. Traction Uranium Corp | Newport Exploration vs. New Age Metals | Newport Exploration vs. York Harbour Metals | Newport Exploration vs. Silver Elephant Mining |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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