Correlation Between American Express and Brinks

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

By analyzing existing cross correlation between American Express and Brinks Co 4625, you can compare the effects of market volatilities on American Express and Brinks 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 Brinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Brinks.

Diversification Opportunities for American Express and Brinks

-0.39

Correlation Coefficient

American Express  Brinks

Very good diversification

The 3 months correlation between American and Brinks is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Brinks Co 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Co 4625 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Co 4625 has no effect on the direction of American Express i.e., American Express and Brinks go up and down completely randomly.

Pair Corralation between American Express and Brinks

Considering the 90-day investment horizon American Express is expected to generate 13.29 times less return on investment than Brinks. But when comparing it to its historical volatility, American Express is 31.01 times less risky than Brinks. It trades about 0.1 of its potential returns per unit of risk. Brinks Co 4625 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,466  in Brinks Co 4625 on October 11, 2024 and sell it today you would lose (370.00) from holding Brinks Co 4625 or give up 3.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

American Express  vs.  Brinks Co 4625

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.

Brinks Co 4625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brinks Co 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Brinks Co 4625 investors.

Pair Trading with American Express and Brinks

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

The idea behind American Express and Brinks Co 4625 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.