Correlation Between American Express and RENN Fund
Can any of the company-specific risk be diversified away by investing in both American Express and RENN Fund 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 RENN Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and RENN Fund, you can compare the effects of market volatilities on American Express and RENN Fund 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 RENN Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and RENN Fund.
Diversification Opportunities for American Express and RENN Fund
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and RENN is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Express and RENN Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENN Fund 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 RENN Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENN Fund has no effect on the direction of American Express i.e., American Express and RENN Fund go up and down completely randomly.
Pair Corralation between American Express and RENN Fund
Considering the 90-day investment horizon American Express is expected to generate 0.65 times more return on investment than RENN Fund. However, American Express is 1.53 times less risky than RENN Fund. It trades about 0.09 of its potential returns per unit of risk. RENN Fund is currently generating about 0.05 per unit of risk. If you would invest 16,878 in American Express on October 24, 2024 and sell it today you would earn a total of 15,055 from holding American Express or generate 89.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. RENN Fund
Performance |
| Timeline |
| American Express |
| RENN Fund |
American Express and RENN Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and RENN Fund
The main advantage of trading using opposite American Express and RENN Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, RENN Fund 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 RENN Fund will offset losses from the drop in RENN Fund's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. MSCI ACWI exAUCONSUMER | American Express vs. Sycamore Entmt Grp |
| RENN Fund vs. Ellsworth Convertible Growth | RENN Fund vs. Delaware Investments Florida | RENN Fund vs. Nuveen New Jersey | RENN Fund vs. John Hancock Hedged |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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