Correlation Between SLM Corp and American Express
Can any of the company-specific risk be diversified away by investing in both SLM Corp 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 SLM Corp and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLM Corp and American Express, you can compare the effects of market volatilities on SLM Corp 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 SLM Corp with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and American Express.
Diversification Opportunities for SLM Corp and American Express
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SLM and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and SLM Corp 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 SLM 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 SLM Corp i.e., SLM Corp and American Express go up and down completely randomly.
Pair Corralation between SLM Corp and American Express
Considering the 90-day investment horizon SLM Corp is expected to generate 1.86 times more return on investment than American Express. However, SLM Corp is 1.86 times more volatile than American Express. It trades about 0.27 of its potential returns per unit of risk. American Express is currently generating about 0.29 per unit of risk. If you would invest 2,235 in SLM Corp on August 29, 2024 and sell it today you would earn a total of 507.00 from holding SLM Corp or generate 22.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLM Corp vs. American Express
Performance |
| Timeline |
| SLM Corp |
| American Express |
SLM Corp and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and American Express
The main advantage of trading using opposite SLM Corp and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp 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.| SLM Corp vs. Orix Corp Ads | SLM Corp vs. Medallion Financial Corp | SLM Corp vs. Oportun Financial Corp | SLM Corp vs. SLM Corp Pb |
| American Express vs. Orix Corp Ads | American Express vs. Medallion Financial Corp | American Express vs. Oportun Financial Corp | American Express vs. SLM Corp Pb |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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