Correlation Between American Express and STRYKER

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Can any of the company-specific risk be diversified away by investing in both American Express and STRYKER 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 STRYKER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and STRYKER P 3375, you can compare the effects of market volatilities on American Express and STRYKER 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 STRYKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and STRYKER.

Diversification Opportunities for American Express and STRYKER

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between American and STRYKER is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding American Express and STRYKER P 3375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRYKER P 3375 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 STRYKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRYKER P 3375 has no effect on the direction of American Express i.e., American Express and STRYKER go up and down completely randomly.

Pair Corralation between American Express and STRYKER

Considering the 90-day investment horizon American Express is expected to generate 5.61 times more return on investment than STRYKER. However, American Express is 5.61 times more volatile than STRYKER P 3375. It trades about 0.12 of its potential returns per unit of risk. STRYKER P 3375 is currently generating about -0.01 per unit of risk. If you would invest  24,666  in American Express on October 26, 2024 and sell it today you would earn a total of  6,981  from holding American Express or generate 28.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy96.77%
ValuesDaily Returns

American Express  vs.  STRYKER P 3375

 Performance 
       Timeline  
American Express 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.
STRYKER P 3375 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STRYKER P 3375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STRYKER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

American Express and STRYKER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and STRYKER

The main advantage of trading using opposite American Express and STRYKER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, STRYKER 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 STRYKER will offset losses from the drop in STRYKER's long position.
The idea behind American Express and STRYKER P 3375 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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