Correlation Between American Express and INTNED

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

By analyzing existing cross correlation between American Express and INTNED 575, you can compare the effects of market volatilities on American Express and INTNED 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 INTNED. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and INTNED.

Diversification Opportunities for American Express and INTNED

-0.47

Correlation Coefficient

American Express  INTNED

Very good diversification

The 3 months correlation between American and INTNED is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Express and INTNED 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTNED 575 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 INTNED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTNED 575 has no effect on the direction of American Express i.e., American Express and INTNED go up and down completely randomly.

Pair Corralation between American Express and INTNED

Considering the 90-day investment horizon American Express is expected to generate 0.77 times more return on investment than INTNED. However, American Express is 1.3 times less risky than INTNED. It trades about 0.23 of its potential returns per unit of risk. INTNED 575 is currently generating about -0.24 per unit of risk. If you would invest  28,554  in American Express on September 19, 2024 and sell it today you would earn a total of  1,580  from holding American Express or generate 5.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	47.62%
Values	Daily Returns

American Express  vs.  INTNED 575

American Express

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 10 (%) 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 January 2025.

INTNED 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTNED 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 INTNED 575 investors.

Pair Trading with American Express and INTNED

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

The idea behind American Express and INTNED 575 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.