Correlation Between American Express and AUTOMATIC
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By analyzing existing cross correlation between American Express and AUTOMATIC DATA PROCESSING, you can compare the effects of market volatilities on American Express and AUTOMATIC 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 AUTOMATIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and AUTOMATIC.
Diversification Opportunities for American Express and AUTOMATIC
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and AUTOMATIC is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding American Express and AUTOMATIC DATA PROCESSING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTOMATIC DATA PROCESSING 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 AUTOMATIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTOMATIC DATA PROCESSING has no effect on the direction of American Express i.e., American Express and AUTOMATIC go up and down completely randomly.
Pair Corralation between American Express and AUTOMATIC
Considering the 90-day investment horizon American Express is expected to generate 5.99 times more return on investment than AUTOMATIC. However, American Express is 5.99 times more volatile than AUTOMATIC DATA PROCESSING. It trades about 0.19 of its potential returns per unit of risk. AUTOMATIC DATA PROCESSING is currently generating about 0.13 per unit of risk. If you would invest 30,285 in American Express on November 9, 2024 and sell it today you would earn a total of 1,730 from holding American Express or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Express vs. AUTOMATIC DATA PROCESSING
Performance |
| Timeline |
| American Express |
| AUTOMATIC DATA PROCESSING |
American Express and AUTOMATIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and AUTOMATIC
The main advantage of trading using opposite American Express and AUTOMATIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, AUTOMATIC 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 AUTOMATIC will offset losses from the drop in AUTOMATIC's long position.| American Express vs. Visa Class A | American Express vs. Great Western Minerals | American Express vs. Enterprise Bancorp | American Express vs. T Rowe Price |
| AUTOMATIC vs. Cardinal Health | AUTOMATIC vs. Summit Therapeutics PLC | AUTOMATIC vs. Valneva SE ADR | AUTOMATIC vs. Ardelyx |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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