Correlation Between Controladora Vuela and American Express
Can any of the company-specific risk be diversified away by investing in both Controladora Vuela 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 Controladora Vuela and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Controladora Vuela Compaa and American Express, you can compare the effects of market volatilities on Controladora Vuela 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 Controladora Vuela with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Controladora Vuela and American Express.
Diversification Opportunities for Controladora Vuela and American Express
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Controladora and American is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Controladora Vuela Compaa and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Controladora Vuela 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 Controladora Vuela Compaa 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 Controladora Vuela i.e., Controladora Vuela and American Express go up and down completely randomly.
Pair Corralation between Controladora Vuela and American Express
Assuming the 90 days trading horizon Controladora Vuela is expected to generate 1.59 times less return on investment than American Express. But when comparing it to its historical volatility, Controladora Vuela Compaa is 1.65 times less risky than American Express. It trades about 0.27 of its potential returns per unit of risk. American Express is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 543,770 in American Express on August 29, 2024 and sell it today you would earn a total of 84,230 from holding American Express or generate 15.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Controladora Vuela Compaa vs. American Express
Performance |
| Timeline |
| Controladora Vuela Compaa |
| American Express |
Controladora Vuela and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Controladora Vuela and American Express
The main advantage of trading using opposite Controladora Vuela and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Controladora Vuela 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.| Controladora Vuela vs. Grupo Profuturo SAB | Controladora Vuela vs. Corporacin Inmobiliaria Vesta | Controladora Vuela vs. Financiera Independencia SAB | Controladora Vuela vs. The Select Sector |
| American Express vs. McEwen Mining | American Express vs. DXC Technology | American Express vs. Delta Air Lines | American Express vs. Cognizant Technology Solutions |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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