Correlation Between American Express and Royal Helium
Can any of the company-specific risk be diversified away by investing in both American Express and Royal Helium 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 Royal Helium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Royal Helium, you can compare the effects of market volatilities on American Express and Royal Helium 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 Royal Helium. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Royal Helium.
Diversification Opportunities for American Express and Royal Helium
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Royal is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Royal Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Helium 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 Royal Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Helium has no effect on the direction of American Express i.e., American Express and Royal Helium go up and down completely randomly.
Pair Corralation between American Express and Royal Helium
Considering the 90-day investment horizon American Express is expected to generate 0.24 times more return on investment than Royal Helium. However, American Express is 4.13 times less risky than Royal Helium. It trades about 0.28 of its potential returns per unit of risk. Royal Helium is currently generating about -0.03 per unit of risk. If you would invest 27,043 in American Express on August 30, 2024 and sell it today you would earn a total of 3,382 from holding American Express or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Royal Helium
Performance |
| Timeline |
| American Express |
| Royal Helium |
American Express and Royal Helium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Royal Helium
The main advantage of trading using opposite American Express and Royal Helium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Royal Helium 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 Royal Helium will offset losses from the drop in Royal Helium's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. X Financial Class | American Express vs. Yirendai |
| Royal Helium vs. Desert Mountain Energy | Royal Helium vs. Avanti Energy | Royal Helium vs. Helium One Global | Royal Helium vs. Royal Helium |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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