Correlation Between American Express and Financiera Independencia
Can any of the company-specific risk be diversified away by investing in both American Express and Financiera Independencia 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 American Express and Financiera Independencia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Financiera Independencia SAB, you can compare the effects of market volatilities on American Express and Financiera Independencia 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 American Express with a short position of Financiera Independencia. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Financiera Independencia.
Diversification Opportunities for American Express and Financiera Independencia
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Financiera is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Financiera Independencia SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financiera Independencia and American Express 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 American Express are associated (or correlated) with Financiera Independencia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financiera Independencia has no effect on the direction of American Express i.e., American Express and Financiera Independencia go up and down completely randomly.
Pair Corralation between American Express and Financiera Independencia
Assuming the 90 days trading horizon American Express is expected to generate 1.42 times more return on investment than Financiera Independencia. However, American Express is 1.42 times more volatile than Financiera Independencia SAB. It trades about 0.14 of its potential returns per unit of risk. Financiera Independencia SAB is currently generating about -0.15 per unit of risk. If you would invest 510,778 in American Express on September 24, 2024 and sell it today you would earn a total of 85,288 from holding American Express or generate 16.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 98.39% |
Values | Daily Returns |
American Express vs. Financiera Independencia SAB
Performance |
Timeline |
American Express |
Financiera Independencia |
American Express and Financiera Independencia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Express and Financiera Independencia
The main advantage of trading using opposite American Express and Financiera Independencia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Financiera Independencia 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 Financiera Independencia will offset losses from the drop in Financiera Independencia's long position.American Express vs. Visa Inc | American Express vs. Mastercard Incorporated | American Express vs. Capital One Financial | American Express vs. The Western Union |
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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