Correlation Between American Express and Largecap Value
Can any of the company-specific risk be diversified away by investing in both American Express and Largecap Value 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 Largecap Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Largecap Value Fund, you can compare the effects of market volatilities on American Express and Largecap Value 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 Largecap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Largecap Value.
Diversification Opportunities for American Express and Largecap Value
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Largecap is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Largecap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largecap Value 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 Largecap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largecap Value has no effect on the direction of American Express i.e., American Express and Largecap Value go up and down completely randomly.
Pair Corralation between American Express and Largecap Value
Considering the 90-day investment horizon American Express is expected to generate 2.24 times more return on investment than Largecap Value. However, American Express is 2.24 times more volatile than Largecap Value Fund. It trades about 0.11 of its potential returns per unit of risk. Largecap Value Fund is currently generating about 0.15 per unit of risk. If you would invest 30,171 in American Express on June 6, 2025 and sell it today you would earn a total of 2,894 from holding American Express or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
American Express vs. Largecap Value Fund
Performance |
| Timeline |
| American Express |
| Largecap Value |
American Express and Largecap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Largecap Value
The main advantage of trading using opposite American Express and Largecap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Largecap Value 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 Largecap Value will offset losses from the drop in Largecap Value's long position.| American Express vs. Mastercard | American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. The Bank of |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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