Correlation Between American Express and VictoryShares Multi

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

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

Diversification Opportunities for American Express and VictoryShares Multi

0.66

Correlation Coefficient

American Express  VictoryShares Multi

Poor diversification

The 3 months correlation between American and VictoryShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding American Express and VictoryShares Multi Factor Min in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Multi 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 VictoryShares Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Multi has no effect on the direction of American Express i.e., American Express and VictoryShares Multi go up and down completely randomly.

Pair Corralation between American Express and VictoryShares Multi

Considering the 90-day investment horizon American Express is expected to under-perform the VictoryShares Multi. In addition to that, American Express is 2.71 times more volatile than VictoryShares Multi Factor Minimum. It trades about -0.1 of its total potential returns per unit of risk. VictoryShares Multi Factor Minimum is currently generating about 0.0 per unit of volatility. If you would invest  4,792  in VictoryShares Multi Factor Minimum on December 31, 2024 and sell it today you would lose (1.00) from holding VictoryShares Multi Factor Minimum or give up 0.02% of portfolio value over 90 days.

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

American Express  vs.  VictoryShares Multi Factor Min

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 latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

VictoryShares Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares Multi Factor Minimum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, VictoryShares Multi is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with American Express and VictoryShares Multi

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

The idea behind American Express and VictoryShares Multi Factor Minimum 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.