Correlation Between American Express and Portmeirion Group

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

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

Diversification Opportunities for American Express and Portmeirion Group

0.37

Correlation Coefficient

American Express  Portmeirion Group

Weak diversification

The 3 months correlation between American and Portmeirion is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Portmeirion Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portmeirion Group PLC 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 Portmeirion Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portmeirion Group PLC has no effect on the direction of American Express i.e., American Express and Portmeirion Group go up and down completely randomly.

Pair Corralation between American Express and Portmeirion Group

Considering the 90-day investment horizon American Express is expected to generate 0.54 times more return on investment than Portmeirion Group. However, American Express is 1.84 times less risky than Portmeirion Group. It trades about -0.1 of its potential returns per unit of risk. Portmeirion Group PLC is currently generating about -0.13 per unit of risk. If you would invest  29,663  in American Express on December 28, 2024 and sell it today you would lose (3,115) from holding American Express or give up 10.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

American Express  vs.  Portmeirion Group PLC

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.

Portmeirion Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Portmeirion Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with American Express and Portmeirion Group

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

The idea behind American Express and Portmeirion Group PLC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.