Correlation Between American Express and Intl Star

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

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

Diversification Opportunities for American Express and Intl Star

-0.33

Correlation Coefficient

American Express  Intl Star

Very good diversification

The 3 months correlation between American and Intl is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Intl Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intl Star 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 Intl Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intl Star has no effect on the direction of American Express i.e., American Express and Intl Star go up and down completely randomly.

Pair Corralation between American Express and Intl Star

Considering the 90-day investment horizon American Express is expected to generate 13.28 times less return on investment than Intl Star. But when comparing it to its historical volatility, American Express is 9.41 times less risky than Intl Star. It trades about 0.06 of its potential returns per unit of risk. Intl Star is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Intl Star on October 7, 2024 and sell it today you would earn a total of  0.01  from holding Intl Star or generate 12.5% return on investment over 90 days.

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

American Express  vs.  Intl Star

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 unsteady basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Intl Star

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intl Star has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with American Express and Intl Star

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

The idea behind American Express and Intl Star 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.