Correlation Between American Express and First BITCoin

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

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

Diversification Opportunities for American Express and First BITCoin

-0.48

Correlation Coefficient

American Express  First BITCoin

Very good diversification

The 3 months correlation between American and First is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Express and First BITCoin Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First BITCoin Capital 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 First BITCoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First BITCoin Capital has no effect on the direction of American Express i.e., American Express and First BITCoin go up and down completely randomly.

Pair Corralation between American Express and First BITCoin

Considering the 90-day investment horizon American Express is expected to generate 0.12 times more return on investment than First BITCoin. However, American Express is 8.54 times less risky than First BITCoin. It trades about 0.11 of its potential returns per unit of risk. First BITCoin Capital is currently generating about -0.15 per unit of risk. If you would invest  22,246  in American Express on February 5, 2024 and sell it today you would earn a total of  831.00  from holding American Express or generate 3.74% return on investment over 90 days.

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

American Express  vs.  First BITCoin Capital

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 may actually be approaching a critical reversion point that can send shares even higher in June 2024.

First BITCoin Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First BITCoin Capital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, First BITCoin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Express and First BITCoin

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

The idea behind American Express and First BITCoin Capital 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.