Correlation Between American Express and Hp

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Can any of the company-specific risk be diversified away by investing in both American Express and Hp 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 Hp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Hp Inc, you can compare the effects of market volatilities on American Express and Hp 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 Hp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Hp.

Diversification Opportunities for American Express and Hp

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between American and Hp is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Hp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hp Inc 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 Hp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hp Inc has no effect on the direction of American Express i.e., American Express and Hp go up and down completely randomly.

Pair Corralation between American Express and Hp

Considering the 90-day investment horizon American Express is expected to generate 0.87 times more return on investment than Hp. However, American Express is 1.15 times less risky than Hp. It trades about -0.08 of its potential returns per unit of risk. Hp Inc is currently generating about -0.1 per unit of risk. If you would invest  18,370  in American Express on July 7, 2022 and sell it today you would lose (3,933)  from holding American Express or give up 21.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  Hp Inc

 Performance (%) 
       Timeline  
American Express 
American Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, American Express is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

Hp Inc 
Hp Performance
0 of 100
Over the last 90 days Hp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in November 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Hp Price Channel

American Express and Hp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Hp

The main advantage of trading using opposite American Express and Hp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Hp 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 Hp will offset losses from the drop in Hp's long position.
American Express vs. Paypal Holdings
The idea behind American Express and Hp Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Hp vs. Amazon Inc
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 CEO Directory module to screen CEOs from public companies around the world.

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