Correlation Between American Express and Towpath Focus
Can any of the company-specific risk be diversified away by investing in both American Express and Towpath Focus 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 Towpath Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Towpath Focus, you can compare the effects of market volatilities on American Express and Towpath Focus 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 Towpath Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Towpath Focus.
Diversification Opportunities for American Express and Towpath Focus
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Towpath is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Towpath Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towpath Focus 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 Towpath Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towpath Focus has no effect on the direction of American Express i.e., American Express and Towpath Focus go up and down completely randomly.
Pair Corralation between American Express and Towpath Focus
Considering the 90-day investment horizon American Express is expected to generate 2.58 times more return on investment than Towpath Focus. However, American Express is 2.58 times more volatile than Towpath Focus. It trades about 0.08 of its potential returns per unit of risk. Towpath Focus is currently generating about 0.11 per unit of risk. If you would invest 17,043 in American Express on November 27, 2024 and sell it today you would earn a total of 12,497 from holding American Express or generate 73.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Express vs. Towpath Focus
Performance |
| Timeline |
| American Express |
| Towpath Focus |
American Express and Towpath Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Towpath Focus
The main advantage of trading using opposite American Express and Towpath Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Towpath Focus 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 Towpath Focus will offset losses from the drop in Towpath Focus' long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
| Towpath Focus vs. Ultra Short Fixed Income | Towpath Focus vs. Dreyfusstandish Global Fixed | Towpath Focus vs. T Rowe Price | Towpath Focus vs. T Rowe Price |
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.
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