Correlation Between American Express and Goodness Growth

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

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

Diversification Opportunities for American Express and Goodness Growth

0.56

Correlation Coefficient

American Express  Goodness Growth

Very weak diversification

The 3 months correlation between American and Goodness is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of American Express i.e., American Express and Goodness Growth go up and down completely randomly.

Pair Corralation between American Express and Goodness Growth

Considering the 90-day investment horizon American Express is expected to generate 0.25 times more return on investment than Goodness Growth. However, American Express is 4.04 times less risky than Goodness Growth. It trades about -0.11 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about -0.03 per unit of risk. If you would invest  30,275  in American Express on December 24, 2024 and sell it today you would lose (3,224) from holding American Express or give up 10.65% of portfolio value over 90 days.

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

American Express  vs.  Goodness Growth Holdings

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.

Goodness Growth Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goodness Growth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with American Express and Goodness Growth

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

The idea behind American Express and Goodness Growth Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.