Correlation Between SPDR SP and American Express
Can any of the company-specific risk be diversified away by investing in both SPDR SP and American Express 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 SPDR SP and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and American Express, you can compare the effects of market volatilities on SPDR SP and American Express 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 SPDR SP with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and American Express.
Diversification Opportunities for SPDR SP and American Express
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and SPDR SP 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 SPDR SP 500 are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of SPDR SP i.e., SPDR SP and American Express go up and down completely randomly.
Pair Corralation between SPDR SP and American Express
Considering the 90-day investment horizon SPDR SP 500 is expected to under-perform the American Express. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP 500 is 2.33 times less risky than American Express. The etf trades about -0.15 of its potential returns per unit of risk. The American Express is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 22,377 in American Express on January 26, 2024 and sell it today you would earn a total of 1,535 from holding American Express or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPDR SP 500 vs. American Express
Performance |
| Timeline |
| SPDR SP 500 |
| American Express |
SPDR SP and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and American Express
The main advantage of trading using opposite SPDR SP and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| SPDR SP vs. SPDR MSCI EAFE | SPDR SP vs. SPDR MSCI Emerging | SPDR SP vs. SPDR Russell 1000 | SPDR SP vs. SPDR Russell 1000 |
| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart HoldingsInc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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