Correlation Between American Express and NuShares Enhanced

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

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

Diversification Opportunities for American Express and NuShares Enhanced

-0.53

Correlation Coefficient

American Express  NuShares Enhanced

Excellent diversification

The 3 months correlation between American and NuShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding American Express and NuShares Enhanced Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares Enhanced Yield 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 NuShares Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares Enhanced Yield has no effect on the direction of American Express i.e., American Express and NuShares Enhanced go up and down completely randomly.

Pair Corralation between American Express and NuShares Enhanced

Considering the 90-day investment horizon American Express is expected to under-perform the NuShares Enhanced. In addition to that, American Express is 5.78 times more volatile than NuShares Enhanced Yield. It trades about -0.09 of its total potential returns per unit of risk. NuShares Enhanced Yield is currently generating about 0.14 per unit of volatility. If you would invest  2,043  in NuShares Enhanced Yield on December 23, 2024 and sell it today you would earn a total of  51.00  from holding NuShares Enhanced Yield or generate 2.5% 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.  NuShares Enhanced Yield

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.

NuShares Enhanced Yield

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NuShares Enhanced Yield are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NuShares Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with American Express and NuShares Enhanced

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

The idea behind American Express and NuShares Enhanced Yield 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..