Correlation Between American Express and Oaktree Specialty

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

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

Diversification Opportunities for American Express and Oaktree Specialty

-0.09

Correlation Coefficient

American Express  Oaktree Specialty

Good diversification

The 3 months correlation between American and Oaktree is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Oaktree Specialty Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Specialty Lending 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 Oaktree Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Specialty Lending has no effect on the direction of American Express i.e., American Express and Oaktree Specialty go up and down completely randomly.

Pair Corralation between American Express and Oaktree Specialty

Considering the 90-day investment horizon American Express is expected to generate 1.28 times more return on investment than Oaktree Specialty. However, American Express is 1.28 times more volatile than Oaktree Specialty Lending. It trades about 0.1 of its potential returns per unit of risk. Oaktree Specialty Lending is currently generating about 0.01 per unit of risk. If you would invest  28,555  in American Express on September 20, 2024 and sell it today you would earn a total of  753.00  from holding American Express or generate 2.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

American Express  vs.  Oaktree Specialty Lending

American Express

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 10 (%) 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 January 2025.

Oaktree Specialty Lending

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oaktree Specialty Lending has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Oaktree Specialty is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with American Express and Oaktree Specialty

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

The idea behind American Express and Oaktree Specialty Lending 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.