Correlation Between Molinos Agro and American Express
Can any of the company-specific risk be diversified away by investing in both Molinos Agro 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 Molinos Agro and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molinos Agro SA and American Express Co, you can compare the effects of market volatilities on Molinos Agro 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 Molinos Agro with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molinos Agro and American Express.
Diversification Opportunities for Molinos Agro and American Express
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Molinos and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Agro SA and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Molinos Agro 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 Molinos Agro SA 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 Molinos Agro i.e., Molinos Agro and American Express go up and down completely randomly.
Pair Corralation between Molinos Agro and American Express
Assuming the 90 days trading horizon Molinos Agro SA is expected to generate 3.91 times more return on investment than American Express. However, Molinos Agro is 3.91 times more volatile than American Express Co. It trades about 0.09 of its potential returns per unit of risk. American Express Co is currently generating about 0.29 per unit of risk. If you would invest 2,560,000 in Molinos Agro SA on October 20, 2024 and sell it today you would earn a total of 215,000 from holding Molinos Agro SA or generate 8.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Molinos Agro SA vs. American Express Co
Performance |
Timeline |
Molinos Agro SA |
American Express |
Molinos Agro and American Express Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Molinos Agro and American Express
The main advantage of trading using opposite Molinos Agro and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molinos Agro 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.Molinos Agro vs. Cresud SA | Molinos Agro vs. San Miguel AG | Molinos Agro vs. Ledesma SAAI | Molinos Agro vs. Inversora Juramento SA |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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