Correlation Between American Express and NextSource Materials
Can any of the company-specific risk be diversified away by investing in both American Express and NextSource Materials 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 NextSource Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and NextSource Materials, you can compare the effects of market volatilities on American Express and NextSource Materials 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 NextSource Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and NextSource Materials.
Diversification Opportunities for American Express and NextSource Materials
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and NextSource is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding American Express and NextSource Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextSource Materials 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 NextSource Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextSource Materials has no effect on the direction of American Express i.e., American Express and NextSource Materials go up and down completely randomly.
Pair Corralation between American Express and NextSource Materials
Considering the 90-day investment horizon American Express is expected to generate 0.27 times more return on investment than NextSource Materials. However, American Express is 3.65 times less risky than NextSource Materials. It trades about 0.08 of its potential returns per unit of risk. NextSource Materials is currently generating about 0.02 per unit of risk. If you would invest 29,516 in American Express on September 7, 2024 and sell it today you would earn a total of 537.00 from holding American Express or generate 1.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
American Express vs. NextSource Materials
Performance |
Timeline |
American Express |
NextSource Materials |
American Express and NextSource Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Express and NextSource Materials
The main advantage of trading using opposite American Express and NextSource Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, NextSource Materials 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 NextSource Materials will offset losses from the drop in NextSource Materials' long position.American Express vs. Coca Cola Consolidated | American Express vs. SEI Investments | American Express vs. Embecta Corp | American Express vs. Coca Cola Femsa SAB |
NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Syrah Resources Limited | NextSource Materials vs. Mason Graphite | NextSource Materials vs. Graphite One |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |