Correlation Between American Express and Technology Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both American Express and Technology Telecommunicatio 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 Technology Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Technology Telecommunication, you can compare the effects of market volatilities on American Express and Technology Telecommunicatio 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 Technology Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Technology Telecommunicatio.
Diversification Opportunities for American Express and Technology Telecommunicatio
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Technology is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Technology Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Telecommunicatio 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 Technology Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Telecommunicatio has no effect on the direction of American Express i.e., American Express and Technology Telecommunicatio go up and down completely randomly.
Pair Corralation between American Express and Technology Telecommunicatio
Considering the 90-day investment horizon American Express is expected to generate 11.34 times more return on investment than Technology Telecommunicatio. However, American Express is 11.34 times more volatile than Technology Telecommunication. It trades about 0.28 of its potential returns per unit of risk. Technology Telecommunication is currently generating about 0.19 per unit of risk. If you would invest 27,019 in American Express on September 4, 2024 and sell it today you would earn a total of 3,207 from holding American Express or generate 11.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Express vs. Technology Telecommunication
Performance |
| Timeline |
| American Express |
| Technology Telecommunicatio |
American Express and Technology Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Technology Telecommunicatio
The main advantage of trading using opposite American Express and Technology Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Technology Telecommunicatio 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 Technology Telecommunicatio will offset losses from the drop in Technology Telecommunicatio's long position.| American Express vs. 360 Finance | American Express vs. Enova International | American Express vs. X Financial Class | American Express vs. LendingClub Corp |
| Technology Telecommunicatio vs. Target Global Acquisition | Technology Telecommunicatio vs. Healthcare AI Acquisition |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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