Correlation Between Distribuidora and American Express
Can any of the company-specific risk be diversified away by investing in both Distribuidora and American Express 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 Distribuidora and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribuidora de Gas and American Express Co, you can compare the effects of market volatilities on Distribuidora and American Express 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 Distribuidora with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribuidora and American Express.
Diversification Opportunities for Distribuidora and American Express
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Distribuidora and American is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Distribuidora de Gas and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Distribuidora 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 Distribuidora de Gas are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Distribuidora i.e., Distribuidora and American Express go up and down completely randomly.
Pair Corralation between Distribuidora and American Express
Assuming the 90 days trading horizon Distribuidora de Gas is expected to generate 1.61 times more return on investment than American Express. However, Distribuidora is 1.61 times more volatile than American Express Co. It trades about 0.15 of its potential returns per unit of risk. American Express Co is currently generating about 0.18 per unit of risk. If you would invest 24,475 in Distribuidora de Gas on August 30, 2024 and sell it today you would earn a total of 165,525 from holding Distribuidora de Gas or generate 676.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Distribuidora de Gas vs. American Express Co
Performance |
| Timeline |
| Distribuidora de Gas |
| American Express |
Distribuidora and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribuidora and American Express
The main advantage of trading using opposite Distribuidora and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribuidora position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| Distribuidora vs. Harmony Gold Mining | Distribuidora vs. Compania de Transporte | Distribuidora vs. Agrometal SAI |
| American Express vs. United States Steel | American Express vs. Agrometal SAI | American Express vs. Compania de Transporte | American Express vs. Harmony Gold Mining |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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