Correlation Between American Express and Teucrium Wheat

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

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

Diversification Opportunities for American Express and Teucrium Wheat

-0.78

Correlation Coefficient

American Express  Teucrium Wheat

Pay attention - limited upside

The 3 months correlation between American and Teucrium is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Teucrium Wheat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Wheat 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 Teucrium Wheat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Wheat has no effect on the direction of American Express i.e., American Express and Teucrium Wheat go up and down completely randomly.

Pair Corralation between American Express and Teucrium Wheat

Considering the 90-day investment horizon American Express is expected to generate 1.39 times more return on investment than Teucrium Wheat. However, American Express is 1.39 times more volatile than Teucrium Wheat. It trades about 0.27 of its potential returns per unit of risk. Teucrium Wheat is currently generating about -0.16 per unit of risk. If you would invest  28,554  in American Express on September 17, 2024 and sell it today you would earn a total of  1,803  from holding American Express or generate 6.31% return on investment over 90 days.

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

American Express  vs.  Teucrium Wheat

American Express

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 11 (%) 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.

Teucrium Wheat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teucrium Wheat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with American Express and Teucrium Wheat

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

The idea behind American Express and Teucrium Wheat 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.