Correlation Between American Express and Payfare
Can any of the company-specific risk be diversified away by investing in both American Express and Payfare 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 Payfare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Payfare, you can compare the effects of market volatilities on American Express and Payfare 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 Payfare. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Payfare.
Diversification Opportunities for American Express and Payfare
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Payfare is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Payfare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payfare 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 Payfare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payfare has no effect on the direction of American Express i.e., American Express and Payfare go up and down completely randomly.
Pair Corralation between American Express and Payfare
Considering the 90-day investment horizon American Express is expected to generate 1.18 times more return on investment than Payfare. However, American Express is 1.18 times more volatile than Payfare. It trades about 0.25 of its potential returns per unit of risk. Payfare is currently generating about -0.12 per unit of risk. If you would invest 27,408 in American Express on August 31, 2024 and sell it today you would earn a total of 3,017 from holding American Express or generate 11.01% 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. Payfare
Performance |
| Timeline |
| American Express |
| Payfare |
American Express and Payfare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Payfare
The main advantage of trading using opposite American Express and Payfare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Payfare 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 Payfare will offset losses from the drop in Payfare's long position.| American Express vs. Visa Class A | American Express vs. RLJ Lodging Trust | American Express vs. Aquagold International | American Express vs. Stepstone Group |
| Payfare vs. Priority Technology Holdings | Payfare vs. Repay Holdings Corp | Payfare vs. Radware | Payfare vs. Global Blue Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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