Correlation Between American Express and Mobile Lads

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

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

Diversification Opportunities for American Express and Mobile Lads

-0.41

Correlation Coefficient

American Express  Mobile Lads

Very good diversification

The 3 months correlation between American and Mobile is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Mobile Lads Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Lads Corp 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 Mobile Lads. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Lads Corp has no effect on the direction of American Express i.e., American Express and Mobile Lads go up and down completely randomly.

Pair Corralation between American Express and Mobile Lads

Considering the 90-day investment horizon American Express is expected to generate 0.07 times more return on investment than Mobile Lads. However, American Express is 15.38 times less risky than Mobile Lads. It trades about 0.02 of its potential returns per unit of risk. Mobile Lads Corp is currently generating about -0.22 per unit of risk. If you would invest  30,140  in American Express on October 11, 2024 and sell it today you would earn a total of  145.00  from holding American Express or generate 0.48% return on investment over 90 days.

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

American Express  vs.  Mobile Lads Corp

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

Mobile Lads Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobile Lads Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with American Express and Mobile Lads

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

The idea behind American Express and Mobile Lads Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.