Correlation Between QCR Holdings and American Express

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

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

Diversification Opportunities for QCR Holdings and American Express

0.77

Correlation Coefficient

QCR Holdings  American Express

Poor diversification

The 3 months correlation between QCR and American is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding QCR Holdings and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and QCR Holdings 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 QCR Holdings are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of QCR Holdings i.e., QCR Holdings and American Express go up and down completely randomly.

Pair Corralation between QCR Holdings and American Express

Given the investment horizon of 90 days QCR Holdings is expected to under-perform the American Express. But the stock apears to be less risky and, when comparing its historical volatility, QCR Holdings is 1.39 times less risky than American Express. The stock trades about -0.12 of its potential returns per unit of risk. The American Express is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  30,034  in American Express on December 27, 2024 and sell it today you would lose (2,832) from holding American Express or give up 9.43% of portfolio value over 90 days.

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

QCR Holdings  vs.  American Express

QCR Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days QCR Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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.

Pair Trading with QCR Holdings and American Express

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

The idea behind QCR Holdings and American Express 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.