Correlation Between American Express and CATERPILLAR
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By analyzing existing cross correlation between American Express and CATERPILLAR INC, you can compare the effects of market volatilities on American Express and CATERPILLAR 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 CATERPILLAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and CATERPILLAR.
Diversification Opportunities for American Express and CATERPILLAR
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and CATERPILLAR is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding American Express and CATERPILLAR INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATERPILLAR INC 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 CATERPILLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATERPILLAR INC has no effect on the direction of American Express i.e., American Express and CATERPILLAR go up and down completely randomly.
Pair Corralation between American Express and CATERPILLAR
Considering the 90-day investment horizon American Express is expected to generate 1.38 times more return on investment than CATERPILLAR. However, American Express is 1.38 times more volatile than CATERPILLAR INC. It trades about 0.22 of its potential returns per unit of risk. CATERPILLAR INC is currently generating about 0.18 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 1,954 from holding American Express or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. CATERPILLAR INC
Performance |
| Timeline |
| American Express |
| CATERPILLAR INC |
American Express and CATERPILLAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and CATERPILLAR
The main advantage of trading using opposite American Express and CATERPILLAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, CATERPILLAR 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 CATERPILLAR will offset losses from the drop in CATERPILLAR's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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