Correlation Between Regional Management and American Express
Can any of the company-specific risk be diversified away by investing in both Regional Management 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 Regional Management and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and American Express, you can compare the effects of market volatilities on Regional Management 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 Regional Management with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and American Express.
Diversification Opportunities for Regional Management and American Express
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regional and American is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Regional Management 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 Regional Management Corp 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 Regional Management i.e., Regional Management and American Express go up and down completely randomly.
Pair Corralation between Regional Management and American Express
Allowing for the 90-day total investment horizon Regional Management is expected to generate 1.53 times less return on investment than American Express. In addition to that, Regional Management is 1.53 times more volatile than American Express. It trades about 0.12 of its total potential returns per unit of risk. American Express is currently generating about 0.29 per unit of volatility. If you would invest 27,147 in American Express on August 28, 2024 and sell it today you would earn a total of 3,374 from holding American Express or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. American Express
Performance |
| Timeline |
| Regional Management Corp |
| American Express |
Regional Management and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and American Express
The main advantage of trading using opposite Regional Management and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management 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.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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