Correlation Between American Express and Fastbase

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

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

Diversification Opportunities for American Express and Fastbase

-0.38

Correlation Coefficient

American Express  Fastbase

Very good diversification

The 3 months correlation between American and Fastbase is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Fastbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastbase 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 Fastbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastbase has no effect on the direction of American Express i.e., American Express and Fastbase go up and down completely randomly.

Pair Corralation between American Express and Fastbase

Considering the 90-day investment horizon American Express is expected to generate 8.39 times less return on investment than Fastbase. But when comparing it to its historical volatility, American Express is 9.93 times less risky than Fastbase. It trades about 0.02 of its potential returns per unit of risk. Fastbase is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Fastbase on October 11, 2024 and sell it today you would lose (20.00) from holding Fastbase or give up 13.33% of portfolio value over 90 days.

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

American Express  vs.  Fastbase

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.

Fastbase

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fastbase are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fastbase exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Express and Fastbase

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

The idea behind American Express and Fastbase 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..