Correlation Between American Express and The Jensen
Can any of the company-specific risk be diversified away by investing in both American Express and The Jensen 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 The Jensen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and The Jensen Portfolio, you can compare the effects of market volatilities on American Express and The Jensen 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 The Jensen. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and The Jensen.
Diversification Opportunities for American Express and The Jensen
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and The is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Express and The Jensen Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Portfolio 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 The Jensen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jensen Portfolio has no effect on the direction of American Express i.e., American Express and The Jensen go up and down completely randomly.
Pair Corralation between American Express and The Jensen
Considering the 90-day investment horizon American Express is expected to under-perform the The Jensen. In addition to that, American Express is 2.25 times more volatile than The Jensen Portfolio. It trades about -0.08 of its total potential returns per unit of risk. The Jensen Portfolio is currently generating about -0.02 per unit of volatility. If you would invest 5,811 in The Jensen Portfolio on December 28, 2024 and sell it today you would lose (63.00) from holding The Jensen Portfolio or give up 1.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Express vs. The Jensen Portfolio
Performance |
Timeline |
American Express |
Jensen Portfolio |
American Express and The Jensen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Express and The Jensen
The main advantage of trading using opposite American Express and The Jensen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, The Jensen 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 The Jensen will offset losses from the drop in The Jensen'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 |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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