Correlation Between Ternium SA and American Express
Can any of the company-specific risk be diversified away by investing in both Ternium SA 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 Ternium SA and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA DRC and American Express Co, you can compare the effects of market volatilities on Ternium SA 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 Ternium SA with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and American Express.
Diversification Opportunities for Ternium SA and American Express
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ternium and American is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA DRC and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Ternium SA 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 Ternium SA DRC 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 Ternium SA i.e., Ternium SA and American Express go up and down completely randomly.
Pair Corralation between Ternium SA and American Express
Assuming the 90 days trading horizon Ternium SA is expected to generate 2.16 times less return on investment than American Express. In addition to that, Ternium SA is 1.4 times more volatile than American Express Co. It trades about 0.06 of its total potential returns per unit of risk. American Express Co is currently generating about 0.17 per unit of volatility. If you would invest 346,400 in American Express Co on August 30, 2024 and sell it today you would earn a total of 1,883,600 from holding American Express Co or generate 543.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA DRC vs. American Express Co
Performance |
| Timeline |
| Ternium SA DRC |
| American Express |
Ternium SA and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and American Express
The main advantage of trading using opposite Ternium SA and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA 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.| Ternium SA vs. United States Steel | Ternium SA vs. Compania de Transporte | Ternium SA vs. Harmony Gold Mining | Ternium SA vs. Agrometal SAI |
| American Express vs. United States Steel | American Express vs. Agrometal SAI | American Express vs. Compania de Transporte | American Express vs. Harmony Gold Mining |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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