Correlation Between American Express and ATMA Participaes
Can any of the company-specific risk be diversified away by investing in both American Express and ATMA Participaes 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 ATMA Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and ATMA Participaes SA, you can compare the effects of market volatilities on American Express and ATMA Participaes 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 ATMA Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and ATMA Participaes.
Diversification Opportunities for American Express and ATMA Participaes
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and ATMA is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Express and ATMA Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMA Participaes 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 ATMA Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATMA Participaes has no effect on the direction of American Express i.e., American Express and ATMA Participaes go up and down completely randomly.
Pair Corralation between American Express and ATMA Participaes
Assuming the 90 days trading horizon American Express is expected to generate 0.25 times more return on investment than ATMA Participaes. However, American Express is 3.96 times less risky than ATMA Participaes. It trades about 0.23 of its potential returns per unit of risk. ATMA Participaes SA is currently generating about 0.04 per unit of risk. If you would invest 17,988 in American Express on October 20, 2024 and sell it today you would earn a total of 977.00 from holding American Express or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. ATMA Participaes SA
Performance |
| Timeline |
| American Express |
| ATMA Participaes |
American Express and ATMA Participaes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and ATMA Participaes
The main advantage of trading using opposite American Express and ATMA Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, ATMA Participaes 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 ATMA Participaes will offset losses from the drop in ATMA Participaes' long position.| American Express vs. Visa Inc | American Express vs. Mastercard Incorporated | American Express vs. PayPal Holdings | American Express vs. Capital One Financial |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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