Correlation Between American Express and WELLTOWER

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

By analyzing existing cross correlation between American Express and WELLTOWER INC 425, you can compare the effects of market volatilities on American Express and WELLTOWER 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 WELLTOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and WELLTOWER.

Diversification Opportunities for American Express and WELLTOWER

0.15

Correlation Coefficient

American Express  WELLTOWER

Average diversification

The 3 months correlation between American and WELLTOWER is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Express and WELLTOWER INC 425 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELLTOWER INC 425 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 WELLTOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELLTOWER INC 425 has no effect on the direction of American Express i.e., American Express and WELLTOWER go up and down completely randomly.

Pair Corralation between American Express and WELLTOWER

Considering the 90-day investment horizon American Express is expected to under-perform the WELLTOWER. In addition to that, American Express is 1.36 times more volatile than WELLTOWER INC 425. It trades about -0.21 of its total potential returns per unit of risk. WELLTOWER INC 425 is currently generating about -0.19 per unit of volatility. If you would invest  9,848  in WELLTOWER INC 425 on December 2, 2024 and sell it today you would lose (342.00) from holding WELLTOWER INC 425 or give up 3.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

American Express  vs.  WELLTOWER INC 425

American Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American Express is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

WELLTOWER INC 425

Risk-Adjusted Performance

Very Weak

Over the last 90 days WELLTOWER INC 425 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WELLTOWER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Express and WELLTOWER

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

The idea behind American Express and WELLTOWER INC 425 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.