Correlation Between American Express and Oklahoma College

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

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

Diversification Opportunities for American Express and Oklahoma College

0.88

Correlation Coefficient

American Express  Oklahoma College

Very poor diversification

The 3 months correlation between American and Oklahoma is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Oklahoma College Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma College Savings 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 Oklahoma College. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma College Savings has no effect on the direction of American Express i.e., American Express and Oklahoma College go up and down completely randomly.

Pair Corralation between American Express and Oklahoma College

Considering the 90-day investment horizon American Express is expected to generate 1.41 times more return on investment than Oklahoma College. However, American Express is 1.41 times more volatile than Oklahoma College Savings. It trades about 0.08 of its potential returns per unit of risk. Oklahoma College Savings is currently generating about 0.09 per unit of risk. If you would invest  27,597  in American Express on October 4, 2024 and sell it today you would earn a total of  2,082  from holding American Express or generate 7.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

American Express  vs.  Oklahoma College Savings

American Express

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 6 (%) 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.

Oklahoma College Savings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oklahoma College Savings are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Oklahoma College may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with American Express and Oklahoma College

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

The idea behind American Express and Oklahoma College Savings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..