Correlation Between American Express and SLM Corp
Can any of the company-specific risk be diversified away by investing in both American Express and SLM Corp 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 SLM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and SLM Corp, you can compare the effects of market volatilities on American Express and SLM Corp 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and SLM Corp.
Diversification Opportunities for American Express and SLM Corp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and SLM is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Express and SLM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp has no effect on the direction of American Express i.e., American Express and SLM Corp go up and down completely randomly.
Pair Corralation between American Express and SLM Corp
Considering the 90-day investment horizon American Express is expected to generate 1.19 times less return on investment than SLM Corp. But when comparing it to its historical volatility, American Express is 1.66 times less risky than SLM Corp. It trades about 0.19 of its potential returns per unit of risk. SLM Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,280 in SLM Corp on August 24, 2024 and sell it today you would earn a total of 206.00 from holding SLM Corp or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. SLM Corp
Performance |
| Timeline |
| American Express |
| SLM Corp |
American Express and SLM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and SLM Corp
The main advantage of trading using opposite American Express and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, SLM Corp 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 SLM Corp will offset losses from the drop in SLM Corp's long position.| American Express vs. Small Cap Core | American Express vs. Morningstar Unconstrained Allocation | American Express vs. Mutual Of America | American Express vs. Ep Emerging Markets |
| SLM Corp vs. Small Cap Core | SLM Corp vs. Morningstar Unconstrained Allocation | SLM Corp vs. Mutual Of America | SLM Corp vs. Ep Emerging Markets |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |