Correlation Between American Express and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both American Express and Vanguard Total 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 Total 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 Total Stock, you can compare the effects of market volatilities on American Express and Vanguard Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Vanguard Total.
Diversification Opportunities for American Express and Vanguard Total
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Vanguard is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of American Express i.e., American Express and Vanguard Total go up and down completely randomly.
Pair Corralation between American Express and Vanguard Total
Considering the 90-day investment horizon American Express is expected to generate 1.86 times more return on investment than Vanguard Total. However, American Express is 1.86 times more volatile than Vanguard Total Stock. It trades about 0.09 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.1 per unit of risk. If you would invest 15,199 in American Express on August 24, 2024 and sell it today you would earn a total of 14,626 from holding American Express or generate 96.23% 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 Total Stock
Performance |
| Timeline |
| American Express |
| Vanguard Total Stock |
American Express and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Vanguard Total
The main advantage of trading using opposite American Express and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. SoFi Technologies | American Express vs. Coca Cola Consolidated |
| Vanguard Total vs. Nationwide Small Cap | Vanguard Total vs. Massmutual Select Small | Vanguard Total vs. Ancorathelen Small Mid Cap | Vanguard Total vs. Ab Small Cap |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |