Correlation Between American Express and 18539UAD7

Can any of the company-specific risk be diversified away by investing in both American Express and 18539UAD7 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 18539UAD7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Express and US18539UAD72, you can compare the effects of market volatilities on American Express and 18539UAD7 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 18539UAD7. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and 18539UAD7.

Diversification Opportunities for American Express and 18539UAD7

-0.69

Correlation Coefficient

American Express  18539UAD7

Excellent diversification

The 3 months correlation between American and 18539UAD7 is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Express and US18539UAD72 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US18539UAD72 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 18539UAD7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US18539UAD72 has no effect on the direction of American Express i.e., American Express and 18539UAD7 go up and down completely randomly.

Pair Corralation between American Express and 18539UAD7

Considering the 90-day investment horizon American Express is expected to generate 1.01 times more return on investment than 18539UAD7. However, American Express is 1.01 times more volatile than US18539UAD72. It trades about 0.17 of its potential returns per unit of risk. US18539UAD72 is currently generating about -0.07 per unit of risk. If you would invest  25,365  in American Express on September 3, 2024 and sell it today you would earn a total of  4,861  from holding American Express or generate 19.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

American Express  vs.  US18539UAD72

American Express

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 13 (%) 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.

US18539UAD72

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US18539UAD72 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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 US18539UAD72 investors.

Pair Trading with American Express and 18539UAD7

The main advantage of trading using opposite American Express and 18539UAD7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, 18539UAD7 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 18539UAD7 will offset losses from the drop in 18539UAD7's long position.

The idea behind American Express and US18539UAD72 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.