Correlation Between American Express and Royce Premier
Can any of the company-specific risk be diversified away by investing in both American Express and Royce Premier 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 Royce Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Royce Premier Fund, you can compare the effects of market volatilities on American Express and Royce Premier 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 Royce Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Royce Premier.
Diversification Opportunities for American Express and Royce Premier
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Royce is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Royce Premier Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Premier 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 Royce Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Premier has no effect on the direction of American Express i.e., American Express and Royce Premier go up and down completely randomly.
Pair Corralation between American Express and Royce Premier
Considering the 90-day investment horizon American Express is expected to generate 1.54 times more return on investment than Royce Premier. However, American Express is 1.54 times more volatile than Royce Premier Fund. It trades about 0.29 of its potential returns per unit of risk. Royce Premier Fund is currently generating about 0.27 per unit of risk. If you would invest 27,147 in American Express on August 28, 2024 and sell it today you would earn a total of 3,374 from holding American Express or generate 12.43% 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. Royce Premier Fund
Performance |
| Timeline |
| American Express |
| Royce Premier |
American Express and Royce Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Royce Premier
The main advantage of trading using opposite American Express and Royce Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Royce Premier 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 Royce Premier will offset losses from the drop in Royce Premier's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| Royce Premier vs. T Rowe Price | Royce Premier vs. Strategic Allocation Aggressive | Royce Premier vs. Real Estate Fund | Royce Premier vs. High Yield Fund |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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