Correlation Between American Express and Vanguard Primecap
Can any of the company-specific risk be diversified away by investing in both American Express and Vanguard Primecap 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 Vanguard Primecap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Vanguard Primecap Fund, you can compare the effects of market volatilities on American Express and Vanguard Primecap 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 Vanguard Primecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Vanguard Primecap.
Diversification Opportunities for American Express and Vanguard Primecap
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Vanguard is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Vanguard Primecap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Primecap 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 Vanguard Primecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Primecap has no effect on the direction of American Express i.e., American Express and Vanguard Primecap go up and down completely randomly.
Pair Corralation between American Express and Vanguard Primecap
Considering the 90-day investment horizon American Express is expected to generate 1.69 times more return on investment than Vanguard Primecap. However, American Express is 1.69 times more volatile than Vanguard Primecap Fund. It trades about 0.12 of its potential returns per unit of risk. Vanguard Primecap Fund is currently generating about 0.06 per unit of risk. If you would invest 21,752 in American Express on August 27, 2024 and sell it today you would earn a total of 8,378 from holding American Express or generate 38.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Vanguard Primecap Fund
Performance |
| Timeline |
| American Express |
| Vanguard Primecap |
American Express and Vanguard Primecap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Vanguard Primecap
The main advantage of trading using opposite American Express and Vanguard Primecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Vanguard Primecap 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 Vanguard Primecap will offset losses from the drop in Vanguard Primecap's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| Vanguard Primecap vs. Vanguard Total Bond | Vanguard Primecap vs. Vanguard Small Cap Index | Vanguard Primecap vs. Vanguard Mid Cap Index | Vanguard Primecap vs. Vanguard Extended Market |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |