Correlation Between American Express and Centr Brands

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

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

Diversification Opportunities for American Express and Centr Brands

0.64

Correlation Coefficient

American Express  Centr Brands

Poor diversification

The 3 months correlation between American and Centr is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Centr Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centr Brands 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 Centr Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centr Brands Corp has no effect on the direction of American Express i.e., American Express and Centr Brands go up and down completely randomly.

Pair Corralation between American Express and Centr Brands

Considering the 90-day investment horizon American Express is expected to generate 0.22 times more return on investment than Centr Brands. However, American Express is 4.54 times less risky than Centr Brands. It trades about -0.07 of its potential returns per unit of risk. Centr Brands Corp is currently generating about -0.14 per unit of risk. If you would invest  30,328  in American Express on December 26, 2024 and sell it today you would lose (2,400) from holding American Express or give up 7.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

American Express  vs.  Centr Brands 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.

Centr Brands Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centr Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with American Express and Centr Brands

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

The idea behind American Express and Centr Brands 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.