Correlation Between American Express and Rbc Bluebay
Can any of the company-specific risk be diversified away by investing in both American Express and Rbc Bluebay 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 Rbc Bluebay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Rbc Bluebay Core, you can compare the effects of market volatilities on American Express and Rbc Bluebay 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 Rbc Bluebay. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Rbc Bluebay.
Diversification Opportunities for American Express and Rbc Bluebay
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Rbc is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Rbc Bluebay Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Bluebay Core 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 Rbc Bluebay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Bluebay Core has no effect on the direction of American Express i.e., American Express and Rbc Bluebay go up and down completely randomly.
Pair Corralation between American Express and Rbc Bluebay
Considering the 90-day investment horizon American Express is expected to generate 4.68 times more return on investment than Rbc Bluebay. However, American Express is 4.68 times more volatile than Rbc Bluebay Core. It trades about 0.19 of its potential returns per unit of risk. Rbc Bluebay Core is currently generating about -0.02 per unit of risk. If you would invest 27,123 in American Express on August 24, 2024 and sell it today you would earn a total of 2,177 from holding American Express or generate 8.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Rbc Bluebay Core
Performance |
| Timeline |
| American Express |
| Rbc Bluebay Core |
American Express and Rbc Bluebay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Rbc Bluebay
The main advantage of trading using opposite American Express and Rbc Bluebay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Rbc Bluebay 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 Rbc Bluebay will offset losses from the drop in Rbc Bluebay's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. SoFi Technologies | American Express vs. Coca Cola Consolidated |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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