Correlation Between American Express and Ricoh Company
Can any of the company-specific risk be diversified away by investing in both American Express and Ricoh Company 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 Ricoh Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Ricoh Company, you can compare the effects of market volatilities on American Express and Ricoh Company 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 Ricoh Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Ricoh Company.
Diversification Opportunities for American Express and Ricoh Company
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Ricoh is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Ricoh Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Company 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 Ricoh Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ricoh Company has no effect on the direction of American Express i.e., American Express and Ricoh Company go up and down completely randomly.
Pair Corralation between American Express and Ricoh Company
Considering the 90-day investment horizon American Express is expected to generate 0.54 times more return on investment than Ricoh Company. However, American Express is 1.86 times less risky than Ricoh Company. It trades about 0.17 of its potential returns per unit of risk. Ricoh Company is currently generating about 0.07 per unit of risk. If you would invest 16,640 in American Express on September 4, 2024 and sell it today you would earn a total of 13,571 from holding American Express or generate 81.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.33% |
| Values | Daily Returns |
American Express vs. Ricoh Company
Performance |
| Timeline |
| American Express |
| Ricoh Company |
American Express and Ricoh Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Ricoh Company
The main advantage of trading using opposite American Express and Ricoh Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Ricoh Company 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 Ricoh Company will offset losses from the drop in Ricoh Company's long position.| American Express vs. 360 Finance | American Express vs. Enova International | American Express vs. X Financial Class | American Express vs. LendingClub Corp |
| Ricoh Company vs. Konica Minolta | Ricoh Company vs. Seiko Epson Corp | Ricoh Company vs. Fujitsu Ltd ADR | Ricoh Company vs. Kawasaki Heavy Industries |
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 Stocks Directory module to find actively traded stocks across global markets.
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