Correlation Between American Express and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both American Express and SSgA SPDR 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 SSgA SPDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and SSgA SPDR ETFs, you can compare the effects of market volatilities on American Express and SSgA SPDR 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 SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and SSgA SPDR.
Diversification Opportunities for American Express and SSgA SPDR
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and SSgA is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Express and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs 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 SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of American Express i.e., American Express and SSgA SPDR go up and down completely randomly.
Pair Corralation between American Express and SSgA SPDR
Considering the 90-day investment horizon American Express is expected to generate 1.15 times more return on investment than SSgA SPDR. However, American Express is 1.15 times more volatile than SSgA SPDR ETFs. It trades about 0.09 of its potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.05 per unit of risk. If you would invest 15,339 in American Express on September 3, 2024 and sell it today you would earn a total of 14,887 from holding American Express or generate 97.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.38% |
| Values | Daily Returns |
American Express vs. SSgA SPDR ETFs
Performance |
| Timeline |
| American Express |
| SSgA SPDR ETFs |
American Express and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and SSgA SPDR
The main advantage of trading using opposite American Express and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.| American Express vs. Highway Holdings Limited | American Express vs. QCR Holdings | American Express vs. Partner Communications | American Express vs. Acumen Pharmaceuticals |
| SSgA SPDR vs. Vanguard Total Stock | SSgA SPDR vs. SPDR SP 500 | SSgA SPDR vs. Vanguard Total Bond | SSgA SPDR vs. Vanguard Value Index |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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