Correlation Between American Express and URU Metals | 0R3C.LSE vs. URU.LSE

Correlation Between American Express and URU Metals

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

Diversification Opportunities for American Express and URU Metals

AmericanURUDiversified AwayAmericanURUDiversified Away100%
0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between American and URU is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 Co are associated (or correlated) with URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of American Express i.e., American Express and URU Metals go up and down completely randomly.

Pair Corralation between American Express and URU Metals

Assuming the 90 days trading horizon American Express Co is expected to generate 0.6 times more return on investment than URU Metals. However, American Express Co is 1.66 times less risky than URU Metals. It trades about 0.22 of its potential returns per unit of risk. URU Metals is currently generating about 0.01 per unit of risk. If you would invest  29,677  in American Express Co on October 22, 2024 and sell it today you would earn a total of  1,593  from holding American Express Co or generate 5.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

American Express Co  vs.  URU Metals

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0204060
JavaScript chart by amCharts 3.21.150R3C URU
       Timeline  
American Express 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in American Express Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, American Express unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan260270280290300310
URU Metals 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in URU Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, URU Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan120140160180200

American Express and URU Metals Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.13-3.84-2.55-1.270.01.322.684.045.416.77 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.150R3C URU
       Returns  

Pair Trading with American Express and URU Metals

The main advantage of trading using opposite American Express and URU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, URU Metals 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 URU Metals will offset losses from the drop in URU Metals' long position.
The idea behind American Express Co and URU Metals 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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