Correlation Between American Express and Lexinfintech Holdings
Can any of the company-specific risk be diversified away by investing in both American Express and Lexinfintech Holdings 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 Lexinfintech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Lexinfintech Holdings, you can compare the effects of market volatilities on American Express and Lexinfintech Holdings 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 Lexinfintech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Lexinfintech Holdings.
Diversification Opportunities for American Express and Lexinfintech Holdings
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Lexinfintech is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings 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 Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of American Express i.e., American Express and Lexinfintech Holdings go up and down completely randomly.
Pair Corralation between American Express and Lexinfintech Holdings
Considering the 90-day investment horizon American Express is expected to generate 0.88 times more return on investment than Lexinfintech Holdings. However, American Express is 1.13 times less risky than Lexinfintech Holdings. It trades about 0.16 of its potential returns per unit of risk. Lexinfintech Holdings is currently generating about -0.08 per unit of risk. If you would invest 22,533 in American Express on January 25, 2024 and sell it today you would earn a total of 1,379 from holding American Express or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Lexinfintech Holdings
Performance |
| Timeline |
| American Express |
| Lexinfintech Holdings |
American Express and Lexinfintech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Lexinfintech Holdings
The main advantage of trading using opposite American Express and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Lexinfintech Holdings 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart HoldingsInc |
| Lexinfintech Holdings vs. 360 Finance | Lexinfintech Holdings vs. Atlanticus Holdings | Lexinfintech Holdings vs. Qudian Inc | Lexinfintech Holdings vs. Enova International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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