diversifiable risk of combining American Express and ProShares Hedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and ProShares Hedge Replication, you can compare the effects of market volatilities on American Express and ProShares Hedge 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 ProShares Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and ProShares Hedge.
Diversification Opportunities for American Express and ProShares Hedge
Pair Corralation between American Express and ProShares Hedge
Considering the 90-day investment horizon American Express is expected to generate 3.41 times more return on investment than ProShares Hedge. However, American Express is 3.41 times more volatile than ProShares Hedge Replication. It trades about 0.03 of its potential returns per unit of risk. ProShares Hedge Replication is currently generating about 0.0 per unit of risk. If you would invest 17,295 in American Express on November 24, 2023 and sell it today you would earn a total of 3,794 from holding American Express or generate 21.94% return on investment over 90 days.
American Express vs. ProShares Hedge Replication
American Express and ProShares Hedge Volatility Contrast
Pair Trading with American Express and ProShares HedgeThe main advantage of trading using opposite American Express and ProShares Hedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, ProShares Hedge 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 ProShares Hedge will offset losses from the drop in ProShares Hedge's long position. The idea behind American Express and ProShares Hedge Replication 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.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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