Correlation Between Virtus LifeSci and American Express
Can any of the company-specific risk be diversified away by investing in both Virtus LifeSci 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 Virtus LifeSci and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus LifeSci Biotech and American Express, you can compare the effects of market volatilities on Virtus LifeSci 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 Virtus LifeSci with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus LifeSci and American Express.
Diversification Opportunities for Virtus LifeSci and American Express
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Virtus and American is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Virtus LifeSci Biotech and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Virtus LifeSci 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 Virtus LifeSci Biotech 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 Virtus LifeSci i.e., Virtus LifeSci and American Express go up and down completely randomly.
Pair Corralation between Virtus LifeSci and American Express
Considering the 90-day investment horizon Virtus LifeSci is expected to generate 13.45 times less return on investment than American Express. In addition to that, Virtus LifeSci is 1.0 times more volatile than American Express. It trades about 0.01 of its total potential returns per unit of risk. American Express is currently generating about 0.12 per unit of volatility. If you would invest 15,358 in American Express on January 21, 2024 and sell it today you would earn a total of 7,746 from holding American Express or generate 50.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Virtus LifeSci Biotech vs. American Express
Performance |
| Timeline |
| Virtus LifeSci Biotech |
| American Express |
Virtus LifeSci and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus LifeSci and American Express
The main advantage of trading using opposite Virtus LifeSci and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus LifeSci 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.| Virtus LifeSci vs. Virtus LifeSci Biotech | Virtus LifeSci vs. ALPS Medical Breakthroughs | Virtus LifeSci vs. Loncar Cancer Immunotherapy | Virtus LifeSci vs. Principal Healthcare Innovators |
| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Mastercard |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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