Correlation Between American Express and UMF
Can any of the company-specific risk be diversified away by investing in both American Express and UMF 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 UMF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and UMF Group, you can compare the effects of market volatilities on American Express and UMF 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 UMF. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and UMF.
Diversification Opportunities for American Express and UMF
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and UMF is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding American Express and UMF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMF Group 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 UMF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMF Group has no effect on the direction of American Express i.e., American Express and UMF go up and down completely randomly.
Pair Corralation between American Express and UMF
If you would invest 27,043 in American Express on August 30, 2024 and sell it today you would earn a total of 3,382 from holding American Express or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
American Express vs. UMF Group
Performance |
| Timeline |
| American Express |
| UMF Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Express and UMF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and UMF
The main advantage of trading using opposite American Express and UMF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, UMF 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 UMF will offset losses from the drop in UMF's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. X Financial Class | American Express vs. Yirendai |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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