Correlation Between American Express and Tortoise Power

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

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

Diversification Opportunities for American Express and Tortoise Power

0.91

Correlation Coefficient

American Express  Tortoise Power

Almost no diversification

The 3 months correlation between American and Tortoise is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Tortoise Power And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tortoise Power And 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 Tortoise Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tortoise Power And has no effect on the direction of American Express i.e., American Express and Tortoise Power go up and down completely randomly.

Pair Corralation between American Express and Tortoise Power

Considering the 90-day investment horizon American Express is expected to generate 1.42 times more return on investment than Tortoise Power. However, American Express is 1.42 times more volatile than Tortoise Power And. It trades about 0.28 of its potential returns per unit of risk. Tortoise Power And is currently generating about 0.34 per unit of risk. If you would invest  27,019  in American Express on September 5, 2024 and sell it today you would earn a total of  3,192  from holding American Express or generate 11.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

American Express  vs.  Tortoise Power And

American Express

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.

Tortoise Power And

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Power And are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Tortoise Power showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Express and Tortoise Power

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

The idea behind American Express and Tortoise Power And 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.