Correlation Between American Express and Oaktree Specialty
Can any of the company-specific risk be diversified away by investing in both American Express and Oaktree Specialty 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 Oaktree Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Oaktree Specialty Lending, you can compare the effects of market volatilities on American Express and Oaktree Specialty 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 Oaktree Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Oaktree Specialty.
Diversification Opportunities for American Express and Oaktree Specialty
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Oaktree is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Oaktree Specialty Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Specialty Lending 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 Oaktree Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Specialty Lending has no effect on the direction of American Express i.e., American Express and Oaktree Specialty go up and down completely randomly.
Pair Corralation between American Express and Oaktree Specialty
Considering the 90-day investment horizon American Express is expected to generate 1.81 times more return on investment than Oaktree Specialty. However, American Express is 1.81 times more volatile than Oaktree Specialty Lending. It trades about 0.25 of its potential returns per unit of risk. Oaktree Specialty Lending is currently generating about 0.22 per unit of risk. If you would invest 29,773 in American Express on November 2, 2024 and sell it today you would earn a total of 2,122 from holding American Express or generate 7.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Oaktree Specialty Lending
Performance |
| Timeline |
| American Express |
| Oaktree Specialty Lending |
American Express and Oaktree Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Oaktree Specialty
The main advantage of trading using opposite American Express and Oaktree Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Oaktree Specialty 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 Oaktree Specialty will offset losses from the drop in Oaktree Specialty's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Mastercard |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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