Correlation Between American Express and T Rowe
Can any of the company-specific risk be diversified away by investing in both American Express and T Rowe 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 T Rowe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and T Rowe Price, you can compare the effects of market volatilities on American Express and T Rowe 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 T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and T Rowe.
Diversification Opportunities for American Express and T Rowe
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and TGRT is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding American Express and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of American Express i.e., American Express and T Rowe go up and down completely randomly.
Pair Corralation between American Express and T Rowe
Considering the 90-day investment horizon American Express is expected to generate 1.15 times more return on investment than T Rowe. However, American Express is 1.15 times more volatile than T Rowe Price. It trades about 0.22 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.1 per unit of risk. If you would invest 29,773 in American Express on November 3, 2024 and sell it today you would earn a total of 1,972 from holding American Express or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Express vs. T Rowe Price
Performance |
| Timeline |
| American Express |
| T Rowe Price |
American Express and T Rowe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and T Rowe
The main advantage of trading using opposite American Express and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| T Rowe vs. FT Vest Equity | T Rowe vs. Northern Lights | T Rowe vs. Dimensional International High | T Rowe vs. First Trust Exchange Traded |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |