Correlation Between American Express and OceanaGold
Can any of the company-specific risk be diversified away by investing in both American Express and OceanaGold 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 OceanaGold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and OceanaGold, you can compare the effects of market volatilities on American Express and OceanaGold 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 OceanaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and OceanaGold.
Diversification Opportunities for American Express and OceanaGold
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and OceanaGold is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Express and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold 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 OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of American Express i.e., American Express and OceanaGold go up and down completely randomly.
Pair Corralation between American Express and OceanaGold
Considering the 90-day investment horizon American Express is expected to generate 0.52 times more return on investment than OceanaGold. However, American Express is 1.92 times less risky than OceanaGold. It trades about 0.11 of its potential returns per unit of risk. OceanaGold is currently generating about 0.05 per unit of risk. If you would invest 14,150 in American Express on September 12, 2024 and sell it today you would earn a total of 16,061 from holding American Express or generate 113.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Express vs. OceanaGold
Performance |
| Timeline |
| American Express |
| OceanaGold |
American Express and OceanaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and OceanaGold
The main advantage of trading using opposite American Express and OceanaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, OceanaGold 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 OceanaGold will offset losses from the drop in OceanaGold's long position.| American Express vs. Victory Integrity Smallmid Cap | American Express vs. Hilton Worldwide Holdings | American Express vs. NVIDIA | American Express vs. JPMorgan Chase Co |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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