Correlation Between American Express and Credit Acceptance
Can any of the company-specific risk be diversified away by investing in both American Express and Credit Acceptance 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 Credit Acceptance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Credit Acceptance, you can compare the effects of market volatilities on American Express and Credit Acceptance 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 Credit Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Credit Acceptance.
Diversification Opportunities for American Express and Credit Acceptance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Credit Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Acceptance 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 Credit Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Acceptance has no effect on the direction of American Express i.e., American Express and Credit Acceptance go up and down completely randomly.
Pair Corralation between American Express and Credit Acceptance
If you would invest 17,014 in American Express on September 22, 2024 and sell it today you would earn a total of 1,234 from holding American Express or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Credit Acceptance
Performance |
| Timeline |
| American Express |
| Credit Acceptance |
American Express and Credit Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Credit Acceptance
The main advantage of trading using opposite American Express and Credit Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Credit Acceptance 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 Credit Acceptance will offset losses from the drop in Credit Acceptance's long position.| American Express vs. Paycom Software | American Express vs. Micron Technology | American Express vs. Metalrgica Riosulense SA | American Express vs. Tres Tentos Agroindustrial |
| Credit Acceptance vs. Visa Inc | Credit Acceptance vs. Mastercard Incorporated | Credit Acceptance vs. American Express | Credit Acceptance vs. PayPal Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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