Correlation Between American Express and Textainer Group
Can any of the company-specific risk be diversified away by investing in both American Express and Textainer Group 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 Textainer Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Textainer Group Holdings, you can compare the effects of market volatilities on American Express and Textainer Group 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 Textainer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Textainer Group.
Diversification Opportunities for American Express and Textainer Group
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Textainer is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Textainer Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textainer Group Holdings 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 Textainer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textainer Group Holdings has no effect on the direction of American Express i.e., American Express and Textainer Group go up and down completely randomly.
Pair Corralation between American Express and Textainer Group
Considering the 90-day investment horizon American Express is expected to generate 1.53 times less return on investment than Textainer Group. But when comparing it to its historical volatility, American Express is 1.13 times less risky than Textainer Group. It trades about 0.09 of its potential returns per unit of risk. Textainer Group Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,274 in Textainer Group Holdings on August 27, 2024 and sell it today you would earn a total of 817.00 from holding Textainer Group Holdings or generate 24.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 25.71% |
| Values | Daily Returns |
American Express vs. Textainer Group Holdings
Performance |
| Timeline |
| American Express |
| Textainer Group Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and Textainer Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Textainer Group
The main advantage of trading using opposite American Express and Textainer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Textainer Group 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 Textainer Group will offset losses from the drop in Textainer Group's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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