Correlation Between American Express and Vanguard Russell
Can any of the company-specific risk be diversified away by investing in both American Express and Vanguard Russell 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 Russell 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 Russell 3000, you can compare the effects of market volatilities on American Express and Vanguard Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Vanguard Russell.
Diversification Opportunities for American Express and Vanguard Russell
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Vanguard Russell 3000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Russell 3000 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Russell 3000 has no effect on the direction of American Express i.e., American Express and Vanguard Russell go up and down completely randomly.
Pair Corralation between American Express and Vanguard Russell
Considering the 90-day investment horizon American Express is expected to generate 1.87 times more return on investment than Vanguard Russell. However, American Express is 1.87 times more volatile than Vanguard Russell 3000. It trades about 0.18 of its potential returns per unit of risk. Vanguard Russell 3000 is currently generating about 0.17 per unit of risk. If you would invest 15,118 in American Express on September 1, 2024 and sell it today you would earn a total of 15,350 from holding American Express or generate 101.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
American Express vs. Vanguard Russell 3000
Performance |
| Timeline |
| American Express |
| Vanguard Russell 3000 |
American Express and Vanguard Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Vanguard Russell
The main advantage of trading using opposite American Express and Vanguard Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Vanguard Russell 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 Russell will offset losses from the drop in Vanguard Russell's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Vanguard Russell vs. Vanguard Total Stock | Vanguard Russell vs. SPDR SP 500 | Vanguard Russell vs. iShares Core SP | Vanguard Russell vs. Vanguard Dividend Appreciation |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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