Correlation Between American Express and West Mining
Can any of the company-specific risk be diversified away by investing in both American Express and West Mining 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 West Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and West Mining Corp, you can compare the effects of market volatilities on American Express and West Mining 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 West Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and West Mining.
Diversification Opportunities for American Express and West Mining
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and West is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding American Express and West Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Mining 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 West Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Mining Corp has no effect on the direction of American Express i.e., American Express and West Mining go up and down completely randomly.
Pair Corralation between American Express and West Mining
Considering the 90-day investment horizon American Express is expected to generate 0.1 times more return on investment than West Mining. However, American Express is 9.99 times less risky than West Mining. It trades about -0.22 of its potential returns per unit of risk. West Mining Corp is currently generating about -0.06 per unit of risk. If you would invest 31,895 in American Express on December 1, 2024 and sell it today you would lose (1,799) from holding American Express or give up 5.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
American Express vs. West Mining Corp
Performance |
| Timeline |
| American Express |
| West Mining Corp |
American Express and West Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and West Mining
The main advantage of trading using opposite American Express and West Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, West Mining 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 West Mining will offset losses from the drop in West Mining's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
| West Mining vs. Atomic Minerals | West Mining vs. Mundoro Capital | West Mining vs. E79 Resources Corp | West Mining vs. Norra Metals Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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