Correlation Between American Express and Simplify Exchange
Can any of the company-specific risk be diversified away by investing in both American Express and Simplify Exchange 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 Simplify Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Simplify Exchange Traded, you can compare the effects of market volatilities on American Express and Simplify Exchange 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 Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Simplify Exchange.
Diversification Opportunities for American Express and Simplify Exchange
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Simplify is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded 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 Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of American Express i.e., American Express and Simplify Exchange go up and down completely randomly.
Pair Corralation between American Express and Simplify Exchange
Considering the 90-day investment horizon American Express is expected to generate 1.71 times more return on investment than Simplify Exchange. However, American Express is 1.71 times more volatile than Simplify Exchange Traded. It trades about 0.3 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about 0.03 per unit of risk. If you would invest 27,008 in American Express on September 1, 2024 and sell it today you would earn a total of 3,460 from holding American Express or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Express vs. Simplify Exchange Traded
Performance |
| Timeline |
| American Express |
| Simplify Exchange Traded |
American Express and Simplify Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Simplify Exchange
The main advantage of trading using opposite American Express and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Simplify Exchange 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 Simplify Exchange will offset losses from the drop in Simplify Exchange's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Simplify Exchange vs. Fidelity MSCI Financials | Simplify Exchange vs. Fidelity MSCI Consumer | Simplify Exchange vs. Fidelity MSCI Consumer | Simplify Exchange vs. Fidelity MSCI Industrials |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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