Correlation Between Falcon Oil and American Express
Can any of the company-specific risk be diversified away by investing in both Falcon Oil 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 Falcon Oil and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Oil Gas and American Express Co, you can compare the effects of market volatilities on Falcon Oil 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 Falcon Oil with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and American Express.
Diversification Opportunities for Falcon Oil and American Express
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Falcon and American is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil 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 Falcon Oil 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 Falcon Oil 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 Falcon Oil i.e., Falcon Oil and American Express go up and down completely randomly.
Pair Corralation between Falcon Oil and American Express
Assuming the 90 days trading horizon Falcon Oil Gas is expected to under-perform the American Express. In addition to that, Falcon Oil is 1.94 times more volatile than American Express Co. It trades about -0.03 of its total potential returns per unit of risk. American Express Co is currently generating about 0.1 per unit of volatility. If you would invest 14,287 in American Express Co on September 23, 2024 and sell it today you would earn a total of 15,681 from holding American Express Co or generate 109.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.6% |
| Values | Daily Returns |
Falcon Oil Gas vs. American Express Co
Performance |
| Timeline |
| Falcon Oil Gas |
| American Express |
Falcon Oil and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Oil and American Express
The main advantage of trading using opposite Falcon Oil and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Oil 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.| Falcon Oil vs. Zegona Communications Plc | Falcon Oil vs. Westlake Chemical Corp | Falcon Oil vs. Wizz Air Holdings | Falcon Oil vs. Batm Advanced Communications |
| American Express vs. Uniper SE | American Express vs. Mulberry Group PLC | American Express vs. London Security Plc | American Express vs. Triad Group PLC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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