Correlation Between United States and American Express
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and American Express Co, you can compare the effects of market volatilities on United States 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 United States with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and American Express.
Diversification Opportunities for United States and American Express
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and American is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and United States 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 United States Steel 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 United States i.e., United States and American Express go up and down completely randomly.
Pair Corralation between United States and American Express
Given the investment horizon of 90 days United States Steel is expected to generate 1.64 times more return on investment than American Express. However, United States is 1.64 times more volatile than American Express Co. It trades about 0.19 of its potential returns per unit of risk. American Express Co is currently generating about 0.23 per unit of risk. If you would invest 1,287,500 in United States Steel on November 2, 2024 and sell it today you would earn a total of 145,000 from holding United States Steel or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. American Express Co
Performance |
| Timeline |
| United States Steel |
| American Express |
United States and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and American Express
The main advantage of trading using opposite United States and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Boldt SA | United States vs. Agrometal SAI | United States vs. Capex SA | United States vs. Pfizer Inc |
| American Express vs. International Business Machines | American Express vs. Transportadora de Gas | American Express vs. Agrometal SAI | American Express vs. Grimoldi SA |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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