Correlation Between American Express and SideChannel
Can any of the company-specific risk be diversified away by investing in both American Express and SideChannel 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 SideChannel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and SideChannel, you can compare the effects of market volatilities on American Express and SideChannel 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 SideChannel. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and SideChannel.
Diversification Opportunities for American Express and SideChannel
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and SideChannel is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Express and SideChannel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SideChannel 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 SideChannel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SideChannel has no effect on the direction of American Express i.e., American Express and SideChannel go up and down completely randomly.
Pair Corralation between American Express and SideChannel
Considering the 90-day investment horizon American Express is expected to generate 4.6 times less return on investment than SideChannel. But when comparing it to its historical volatility, American Express is 9.43 times less risky than SideChannel. It trades about 0.11 of its potential returns per unit of risk. SideChannel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10.00 in SideChannel on September 12, 2024 and sell it today you would lose (4.10) from holding SideChannel or give up 41.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. SideChannel
Performance |
| Timeline |
| American Express |
| SideChannel |
American Express and SideChannel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and SideChannel
The main advantage of trading using opposite American Express and SideChannel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, SideChannel 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 SideChannel will offset losses from the drop in SideChannel's long position.| American Express vs. Victory Integrity Smallmid Cap | American Express vs. Hilton Worldwide Holdings | American Express vs. NVIDIA | American Express vs. JPMorgan Chase Co |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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