Correlation Between MSCI ACWI and American Express
Can any of the company-specific risk be diversified away by investing in both MSCI ACWI 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 MSCI ACWI and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSCI ACWI exAUCONSUMER and American Express, you can compare the effects of market volatilities on MSCI ACWI 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 MSCI ACWI with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI ACWI and American Express.
Diversification Opportunities for MSCI ACWI and American Express
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MSCI and American is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding MSCI ACWI exAUCONSUMER and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and MSCI ACWI 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 MSCI ACWI exAUCONSUMER 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 MSCI ACWI i.e., MSCI ACWI and American Express go up and down completely randomly.
Pair Corralation between MSCI ACWI and American Express
Assuming the 90 days horizon MSCI ACWI is expected to generate 6.43 times less return on investment than American Express. But when comparing it to its historical volatility, MSCI ACWI exAUCONSUMER is 6.44 times less risky than American Express. It trades about 0.12 of its potential returns per unit of risk. American Express is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 20,679 in American Express on November 3, 2024 and sell it today you would earn a total of 11,066 from holding American Express or generate 53.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSCI ACWI exAUCONSUMER vs. American Express
Performance |
| Timeline |
| MSCI ACWI exAUCONSUMER |
| American Express |
MSCI ACWI and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSCI ACWI and American Express
The main advantage of trading using opposite MSCI ACWI and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSCI ACWI 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.| MSCI ACWI vs. Harrow Health 8625 | MSCI ACWI vs. Babcock Wilcox Enterprises, | MSCI ACWI vs. Babcock Wilcox Enterprises | MSCI ACWI vs. Oxford Lane Capital |
| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |