Correlation Between American Express and Alternative Credit
Can any of the company-specific risk be diversified away by investing in both American Express and Alternative Credit 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 Alternative Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Alternative Credit Income, you can compare the effects of market volatilities on American Express and Alternative Credit 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 Alternative Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Alternative Credit.
Diversification Opportunities for American Express and Alternative Credit
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Alternative is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Alternative Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Credit Income 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 Alternative Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Credit Income has no effect on the direction of American Express i.e., American Express and Alternative Credit go up and down completely randomly.
Pair Corralation between American Express and Alternative Credit
Considering the 90-day investment horizon American Express is expected to generate 27.44 times more return on investment than Alternative Credit. However, American Express is 27.44 times more volatile than Alternative Credit Income. It trades about 0.19 of its potential returns per unit of risk. Alternative Credit Income is currently generating about 0.5 per unit of risk. If you would invest 30,285 in American Express on November 9, 2024 and sell it today you would earn a total of 1,730 from holding American Express or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 20.0% |
| Values | Daily Returns |
American Express vs. Alternative Credit Income
Performance |
| Timeline |
| American Express |
| Alternative Credit Income |
Risk-Adjusted Performance
Very Strong
Weak | Strong |
American Express and Alternative Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Alternative Credit
The main advantage of trading using opposite American Express and Alternative Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Alternative Credit 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 Alternative Credit will offset losses from the drop in Alternative Credit's long position.| American Express vs. Visa Class A | American Express vs. Great Western Minerals | American Express vs. Enterprise Bancorp | American Express vs. T Rowe Price |
| Alternative Credit vs. Cohen Steers Real | Alternative Credit vs. Prudential Real Estate | Alternative Credit vs. Voya Real Estate | Alternative Credit vs. Nexpoint Real Estate |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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