Correlation Between American Express and 88 Energy
Can any of the company-specific risk be diversified away by investing in both American Express and 88 Energy 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 88 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and 88 Energy Limited, you can compare the effects of market volatilities on American Express and 88 Energy 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 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and 88 Energy.
Diversification Opportunities for American Express and 88 Energy
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and EEENF is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding American Express and 88 Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy Limited 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 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy Limited has no effect on the direction of American Express i.e., American Express and 88 Energy go up and down completely randomly.
Pair Corralation between American Express and 88 Energy
Considering the 90-day investment horizon American Express is expected to under-perform the 88 Energy. But the stock apears to be less risky and, when comparing its historical volatility, American Express is 4.71 times less risky than 88 Energy. The stock trades about -0.09 of its potential returns per unit of risk. The 88 Energy Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.10 in 88 Energy Limited on December 27, 2024 and sell it today you would earn a total of 0.00 from holding 88 Energy Limited or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Express vs. 88 Energy Limited
Performance |
Timeline |
American Express |
88 Energy Limited |
American Express and 88 Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Express and 88 Energy
The main advantage of trading using opposite American Express and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, 88 Energy 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 88 Energy will offset losses from the drop in 88 Energy's long position.American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
88 Energy vs. Invictus Energy Limited | 88 Energy vs. Sintana Energy | 88 Energy vs. Journey Energy | 88 Energy vs. Trillion Energy International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |