Correlation Between American Express and DIGITAL
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By analyzing existing cross correlation between American Express and DIGITAL RLTY TR, you can compare the effects of market volatilities on American Express and DIGITAL 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 DIGITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and DIGITAL.
Diversification Opportunities for American Express and DIGITAL
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and DIGITAL is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Express and DIGITAL RLTY TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIGITAL RLTY TR 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 DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIGITAL RLTY TR has no effect on the direction of American Express i.e., American Express and DIGITAL go up and down completely randomly.
Pair Corralation between American Express and DIGITAL
Considering the 90-day investment horizon American Express is expected to generate 3.07 times more return on investment than DIGITAL. However, American Express is 3.07 times more volatile than DIGITAL RLTY TR. It trades about 0.1 of its potential returns per unit of risk. DIGITAL RLTY TR is currently generating about 0.01 per unit of risk. If you would invest 15,008 in American Express on August 29, 2024 and sell it today you would earn a total of 15,417 from holding American Express or generate 102.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.57% |
| Values | Daily Returns |
American Express vs. DIGITAL RLTY TR
Performance |
| Timeline |
| American Express |
| DIGITAL RLTY TR |
American Express and DIGITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and DIGITAL
The main advantage of trading using opposite American Express and DIGITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, DIGITAL 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 DIGITAL will offset losses from the drop in DIGITAL's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. Discover Financial Services |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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