Correlation Between American Express and Nuveen Core

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

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

Diversification Opportunities for American Express and Nuveen Core

0.64

Correlation Coefficient

American Express  Nuveen Core

Poor diversification

The 3 months correlation between American and Nuveen is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Nuveen Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Core Equity 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 Nuveen Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Core Equity has no effect on the direction of American Express i.e., American Express and Nuveen Core go up and down completely randomly.

Pair Corralation between American Express and Nuveen Core

Considering the 90-day investment horizon American Express is expected to generate 1.91 times more return on investment than Nuveen Core. However, American Express is 1.91 times more volatile than Nuveen Core Equity. It trades about 0.09 of its potential returns per unit of risk. Nuveen Core Equity is currently generating about 0.08 per unit of risk. If you would invest  25,305  in American Express on November 29, 2024 and sell it today you would earn a total of  4,430  from holding American Express or generate 17.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.18%
Values	Daily Returns

American Express  vs.  Nuveen Core Equity

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.

Nuveen Core Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Core Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound fundamental indicators, Nuveen Core 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 Nuveen Core

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

The idea behind American Express and Nuveen Core Equity 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.