Correlation Between Simon Property and AMERICAN

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

By analyzing existing cross correlation between Simon Property Group and AMERICAN EXPRESS 42, you can compare the effects of market volatilities on Simon Property and AMERICAN 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 Simon Property with a short position of AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and AMERICAN.

Diversification Opportunities for Simon Property and AMERICAN

-0.14

Correlation Coefficient

Simon Property  AMERICAN

Good diversification

The 3 months correlation between Simon and AMERICAN is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and AMERICAN EXPRESS 42 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN EXPRESS and Simon Property 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 Simon Property Group are associated (or correlated) with AMERICAN. 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 Simon Property i.e., Simon Property and AMERICAN go up and down completely randomly.

Pair Corralation between Simon Property and AMERICAN

Considering the 90-day investment horizon Simon Property Group is expected to generate 3.12 times more return on investment than AMERICAN. However, Simon Property is 3.12 times more volatile than AMERICAN EXPRESS 42. It trades about 0.16 of its potential returns per unit of risk. AMERICAN EXPRESS 42 is currently generating about -0.07 per unit of risk. If you would invest  17,353  in Simon Property Group on December 3, 2024 and sell it today you would earn a total of  1,256  from holding Simon Property Group or generate 7.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Simon Property Group  vs.  AMERICAN EXPRESS 42

Simon Property Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Simon Property is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AMERICAN EXPRESS

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMERICAN EXPRESS 42 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AMERICAN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simon Property and AMERICAN

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

The idea behind Simon Property Group and AMERICAN EXPRESS 42 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.