Correlation Between American Express and IShares Morningstar

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

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

Diversification Opportunities for American Express and IShares Morningstar

-0.27

Correlation Coefficient

American Express  IShares Morningstar

Very good diversification

The 3 months correlation between American and IShares is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding American Express and iShares Morningstar Multi Asse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar 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 IShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar has no effect on the direction of American Express i.e., American Express and IShares Morningstar go up and down completely randomly.

Pair Corralation between American Express and IShares Morningstar

Considering the 90-day investment horizon American Express is expected to under-perform the IShares Morningstar. In addition to that, American Express is 5.14 times more volatile than iShares Morningstar Multi Asset. It trades about -0.09 of its total potential returns per unit of risk. iShares Morningstar Multi Asset is currently generating about 0.23 per unit of volatility. If you would invest  1,944  in iShares Morningstar Multi Asset on December 20, 2024 and sell it today you would earn a total of  87.00  from holding iShares Morningstar Multi Asset or generate 4.48% 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.  iShares Morningstar Multi Asse

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.

iShares Morningstar

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Morningstar Multi Asset are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, IShares Morningstar is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American Express and IShares Morningstar

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

The idea behind American Express and iShares Morningstar Multi Asset 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.