Correlation Between American Express and 29670GAF9

Can any of the company-specific risk be diversified away by investing in both American Express and 29670GAF9 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 29670GAF9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Express and WTRG 24 01 MAY 31, you can compare the effects of market volatilities on American Express and 29670GAF9 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 29670GAF9. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and 29670GAF9.

Diversification Opportunities for American Express and 29670GAF9

0.76

Correlation Coefficient

American Express  29670GAF9

Poor diversification

The 3 months correlation between American and 29670GAF9 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding American Express and WTRG 24 01 MAY 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WTRG 24 01 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 29670GAF9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WTRG 24 01 has no effect on the direction of American Express i.e., American Express and 29670GAF9 go up and down completely randomly.

Pair Corralation between American Express and 29670GAF9

Considering the 90-day investment horizon American Express is expected to generate 2.18 times more return on investment than 29670GAF9. However, American Express is 2.18 times more volatile than WTRG 24 01 MAY 31. It trades about 0.11 of its potential returns per unit of risk. WTRG 24 01 MAY 31 is currently generating about -0.19 per unit of risk. If you would invest  27,315  in American Express on October 7, 2024 and sell it today you would earn a total of  2,993  from holding American Express or generate 10.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.79%
Values	Daily Returns

American Express  vs.  WTRG 24 01 MAY 31

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 unsteady basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in February 2025.

WTRG 24 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WTRG 24 01 MAY 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 WTRG 24 01 MAY 31 investors.

Pair Trading with American Express and 29670GAF9

The main advantage of trading using opposite American Express and 29670GAF9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, 29670GAF9 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 29670GAF9 will offset losses from the drop in 29670GAF9's long position.

The idea behind American Express and WTRG 24 01 MAY 31 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.