Correlation Between American Express and USA Equities
Can any of the company-specific risk be diversified away by investing in both American Express and USA Equities 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 USA Equities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and USA Equities Corp, you can compare the effects of market volatilities on American Express and USA Equities 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 USA Equities. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and USA Equities.
Diversification Opportunities for American Express and USA Equities
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and USA is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Express and USA Equities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Equities Corp 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 USA Equities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Equities Corp has no effect on the direction of American Express i.e., American Express and USA Equities go up and down completely randomly.
Pair Corralation between American Express and USA Equities
Considering the 90-day investment horizon American Express is expected to generate 0.2 times more return on investment than USA Equities. However, American Express is 5.0 times less risky than USA Equities. It trades about 0.26 of its potential returns per unit of risk. USA Equities Corp is currently generating about -0.19 per unit of risk. If you would invest 26,998 in American Express on August 25, 2024 and sell it today you would earn a total of 3,132 from holding American Express or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. USA Equities Corp
Performance |
| Timeline |
| American Express |
| USA Equities Corp |
American Express and USA Equities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and USA Equities
The main advantage of trading using opposite American Express and USA Equities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, USA Equities 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 USA Equities will offset losses from the drop in USA Equities' long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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