Correlation Between Natural Health and American Express
Can any of the company-specific risk be diversified away by investing in both Natural Health 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 Natural Health and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trends and American Express, you can compare the effects of market volatilities on Natural Health 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 Natural Health with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and American Express.
Diversification Opportunities for Natural Health and American Express
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Natural and American is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Natural Health 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 Natural Health Trends 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 Natural Health i.e., Natural Health and American Express go up and down completely randomly.
Pair Corralation between Natural Health and American Express
Assuming the 90 days trading horizon Natural Health is expected to generate 1.24 times less return on investment than American Express. In addition to that, Natural Health is 1.68 times more volatile than American Express. It trades about 0.05 of its total potential returns per unit of risk. American Express is currently generating about 0.1 per unit of volatility. If you would invest 14,084 in American Express on October 7, 2024 and sell it today you would earn a total of 15,226 from holding American Express or generate 108.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. American Express
Performance |
| Timeline |
| Natural Health Trends |
| American Express |
Natural Health and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and American Express
The main advantage of trading using opposite Natural Health and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health 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.| Natural Health vs. PROSIEBENSAT1 MEDIADR4 | Natural Health vs. Tencent Music Entertainment | Natural Health vs. Ubisoft Entertainment SA | Natural Health vs. CNVISION MEDIA |
| American Express vs. Jacquet Metal Service | American Express vs. RCI Hospitality Holdings | American Express vs. Ryman Healthcare Limited | American Express vs. FEMALE HEALTH |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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