Correlation Between American Express and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both American Express and Shin Etsu 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 Shin Etsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Shin Etsu Chemical Co, you can compare the effects of market volatilities on American Express and Shin Etsu 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 Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Shin Etsu.
Diversification Opportunities for American Express and Shin Etsu
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Shin is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Shin Etsu Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Etsu Chemical 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 Shin Etsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Etsu Chemical has no effect on the direction of American Express i.e., American Express and Shin Etsu go up and down completely randomly.
Pair Corralation between American Express and Shin Etsu
Considering the 90-day investment horizon American Express is expected to generate 1.56 times more return on investment than Shin Etsu. However, American Express is 1.56 times more volatile than Shin Etsu Chemical Co. It trades about 0.28 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about 0.03 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 Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Express vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| American Express |
| Shin Etsu Chemical |
American Express and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Shin Etsu
The main advantage of trading using opposite American Express and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Shin Etsu 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 Shin Etsu will offset losses from the drop in Shin Etsu'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 |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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