Correlation Between American Express and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both American Express and SPDR MSCI 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 SPDR MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and SPDR MSCI ACWI, you can compare the effects of market volatilities on American Express and SPDR MSCI 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 SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and SPDR MSCI.
Diversification Opportunities for American Express and SPDR MSCI
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and SPDR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Express and SPDR MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI ACWI 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI ACWI has no effect on the direction of American Express i.e., American Express and SPDR MSCI go up and down completely randomly.
Pair Corralation between American Express and SPDR MSCI
Considering the 90-day investment horizon American Express is expected to generate 3.04 times more return on investment than SPDR MSCI. However, American Express is 3.04 times more volatile than SPDR MSCI ACWI. It trades about 0.28 of its potential returns per unit of risk. SPDR MSCI ACWI is currently generating about 0.24 per unit of risk. If you would invest 27,269 in American Express on September 2, 2024 and sell it today you would earn a total of 3,199 from holding American Express or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. SPDR MSCI ACWI
Performance |
| Timeline |
| American Express |
| SPDR MSCI ACWI |
American Express and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and SPDR MSCI
The main advantage of trading using opposite American Express and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, SPDR MSCI 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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