Correlation Between American Express and Santeon
Can any of the company-specific risk be diversified away by investing in both American Express and Santeon 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 Santeon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Santeon Group, you can compare the effects of market volatilities on American Express and Santeon 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 Santeon. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Santeon.
Diversification Opportunities for American Express and Santeon
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Santeon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Santeon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santeon Group 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 Santeon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santeon Group has no effect on the direction of American Express i.e., American Express and Santeon go up and down completely randomly.
Pair Corralation between American Express and Santeon
Considering the 90-day investment horizon American Express is expected to generate 6.46 times less return on investment than Santeon. But when comparing it to its historical volatility, American Express is 8.93 times less risky than Santeon. It trades about 0.17 of its potential returns per unit of risk. Santeon Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Santeon Group on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Santeon Group or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Santeon Group
Performance |
| Timeline |
| American Express |
| Santeon Group |
American Express and Santeon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Santeon
The main advantage of trading using opposite American Express and Santeon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Santeon 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 Santeon will offset losses from the drop in Santeon's long position.| American Express vs. Orix Corp Ads | American Express vs. Medallion Financial Corp | American Express vs. Oportun Financial Corp | American Express vs. SLM Corp Pb |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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