Correlation Between American Express and Microlise Group
Can any of the company-specific risk be diversified away by investing in both American Express and Microlise Group 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 Microlise Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express Co and Microlise Group PLC, you can compare the effects of market volatilities on American Express and Microlise Group 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 Microlise Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Microlise Group.
Diversification Opportunities for American Express and Microlise Group
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Microlise is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Microlise Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microlise Group PLC 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 Co are associated (or correlated) with Microlise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microlise Group PLC has no effect on the direction of American Express i.e., American Express and Microlise Group go up and down completely randomly.
Pair Corralation between American Express and Microlise Group
Assuming the 90 days trading horizon American Express Co is expected to generate 0.41 times more return on investment than Microlise Group. However, American Express Co is 2.44 times less risky than Microlise Group. It trades about 0.16 of its potential returns per unit of risk. Microlise Group PLC is currently generating about -0.11 per unit of risk. If you would invest 27,123 in American Express Co on September 23, 2024 and sell it today you would earn a total of 2,845 from holding American Express Co or generate 10.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
American Express Co vs. Microlise Group PLC
Performance |
Timeline |
American Express |
Microlise Group PLC |
American Express and Microlise Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Express and Microlise Group
The main advantage of trading using opposite American Express and Microlise Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Microlise Group 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 Microlise Group will offset losses from the drop in Microlise Group's long position.American Express vs. Uniper SE | American Express vs. Mulberry Group PLC | American Express vs. London Security Plc | American Express vs. Triad Group PLC |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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