Correlation Between American Express and Monroe Capital
Can any of the company-specific risk be diversified away by investing in both American Express and Monroe Capital 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 Monroe Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Monroe Capital Corp, you can compare the effects of market volatilities on American Express and Monroe Capital 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 Monroe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Monroe Capital.
Diversification Opportunities for American Express and Monroe Capital
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Monroe is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Monroe Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monroe Capital Corp 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 Monroe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monroe Capital Corp has no effect on the direction of American Express i.e., American Express and Monroe Capital go up and down completely randomly.
Pair Corralation between American Express and Monroe Capital
Considering the 90-day investment horizon American Express is expected to generate 13.64 times less return on investment than Monroe Capital. In addition to that, American Express is 1.28 times more volatile than Monroe Capital Corp. It trades about 0.0 of its total potential returns per unit of risk. Monroe Capital Corp is currently generating about 0.08 per unit of volatility. If you would invest 837.00 in Monroe Capital Corp on December 2, 2024 and sell it today you would earn a total of 44.00 from holding Monroe Capital Corp or generate 5.26% 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. Monroe Capital Corp
Performance |
Timeline |
American Express |
Monroe Capital Corp |
American Express and Monroe Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Express and Monroe Capital
The main advantage of trading using opposite American Express and Monroe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Monroe Capital 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 Monroe Capital will offset losses from the drop in Monroe Capital'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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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