Correlation Between American Express and Bowen Acquisition

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

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

Diversification Opportunities for American Express and Bowen Acquisition

0.16

Correlation Coefficient

American Express  Bowen Acquisition

Average diversification

The 3 months correlation between American and Bowen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Bowen Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowen Acquisition Corp 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 Bowen Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowen Acquisition Corp has no effect on the direction of American Express i.e., American Express and Bowen Acquisition go up and down completely randomly.

Pair Corralation between American Express and Bowen Acquisition

Considering the 90-day investment horizon American Express is expected to under-perform the Bowen Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, American Express is 7.0 times less risky than Bowen Acquisition. The stock trades about -0.09 of its potential returns per unit of risk. The Bowen Acquisition Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,092  in Bowen Acquisition Corp on December 20, 2024 and sell it today you would lose (382.00) from holding Bowen Acquisition Corp or give up 34.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

American Express  vs.  Bowen Acquisition Corp

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.

Bowen Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowen Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bowen Acquisition is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with American Express and Bowen Acquisition

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

The idea behind American Express and Bowen Acquisition Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.