Correlation Between American Express and Target Global
Can any of the company-specific risk be diversified away by investing in both American Express and Target Global 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 Target Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Target Global Acquisition, you can compare the effects of market volatilities on American Express and Target Global 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 Target Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Target Global.
Diversification Opportunities for American Express and Target Global
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Target is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Target Global Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Global Acquisition 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 Target Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Global Acquisition has no effect on the direction of American Express i.e., American Express and Target Global go up and down completely randomly.
Pair Corralation between American Express and Target Global
Considering the 90-day investment horizon American Express is expected to generate 2.49 times more return on investment than Target Global. However, American Express is 2.49 times more volatile than Target Global Acquisition. It trades about 0.1 of its potential returns per unit of risk. Target Global Acquisition is currently generating about 0.04 per unit of risk. If you would invest 15,008 in American Express on August 29, 2024 and sell it today you would earn a total of 15,417 from holding American Express or generate 102.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Target Global Acquisition
Performance |
| Timeline |
| American Express |
| Target Global Acquisition |
American Express and Target Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Target Global
The main advantage of trading using opposite American Express and Target Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Target Global 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 Target Global will offset losses from the drop in Target Global's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. Discover Financial Services |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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