Correlation Between American Express and Aldebaran Resources

Can any of the company-specific risk be diversified away by investing in both American Express and Aldebaran Resources 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 Aldebaran Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Express and Aldebaran Resources, you can compare the effects of market volatilities on American Express and Aldebaran Resources 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 Aldebaran Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Aldebaran Resources.

Diversification Opportunities for American Express and Aldebaran Resources

-0.28

Correlation Coefficient

American Express  Aldebaran Resources

Very good diversification

The 3 months correlation between American and Aldebaran is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Aldebaran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldebaran Resources 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 Aldebaran Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldebaran Resources has no effect on the direction of American Express i.e., American Express and Aldebaran Resources go up and down completely randomly.

Pair Corralation between American Express and Aldebaran Resources

Considering the 90-day investment horizon American Express is expected to under-perform the Aldebaran Resources. But the stock apears to be less risky and, when comparing its historical volatility, American Express is 2.63 times less risky than Aldebaran Resources. The stock trades about -0.1 of its potential returns per unit of risk. The Aldebaran Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  131.00  in Aldebaran Resources on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Aldebaran Resources or generate 2.29% 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.  Aldebaran Resources

American Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Aldebaran Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aldebaran Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aldebaran Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with American Express and Aldebaran Resources

The main advantage of trading using opposite American Express and Aldebaran Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Aldebaran Resources 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 Aldebaran Resources will offset losses from the drop in Aldebaran Resources' long position.

The idea behind American Express and Aldebaran Resources 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.