Correlation Between American Express and Columbia Vertible

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

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

Diversification Opportunities for American Express and Columbia Vertible

0.72

Correlation Coefficient

American Express  Columbia Vertible

Poor diversification

The 3 months correlation between American and Columbia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Columbia Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Vertible 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 Columbia Vertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Vertible has no effect on the direction of American Express i.e., American Express and Columbia Vertible go up and down completely randomly.

Pair Corralation between American Express and Columbia Vertible

If you would invest  29,983  in American Express on October 6, 2024 and sell it today you would earn a total of  325.00  from holding American Express or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

American Express  vs.  Columbia Vertible Securities

American Express

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Columbia Vertible

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Columbia Vertible Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Columbia Vertible may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with American Express and Columbia Vertible

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

The idea behind American Express and Columbia Vertible Securities 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.