Correlation Between American Express and Voya Investors

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

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

Diversification Opportunities for American Express and Voya Investors

0.0

Correlation Coefficient

American Express  Voya Investors

Pay attention - limited upside

The 3 months correlation between American and Voya is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Voya Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Investors Trust 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 Voya Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Investors Trust has no effect on the direction of American Express i.e., American Express and Voya Investors go up and down completely randomly.

Pair Corralation between American Express and Voya Investors

Considering the 90-day investment horizon American Express is expected to generate 12.05 times more return on investment than Voya Investors. However, American Express is 12.05 times more volatile than Voya Investors Trust. It trades about 0.1 of its potential returns per unit of risk. Voya Investors Trust is currently generating about 0.12 per unit of risk. If you would invest  15,367  in American Express on December 2, 2024 and sell it today you would earn a total of  14,729  from holding American Express or generate 95.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

American Express  vs.  Voya Investors Trust

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 relatively invariable basic indicators, American Express is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Voya Investors Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Investors Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Express and Voya Investors

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

The idea behind American Express and Voya Investors Trust 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.