Correlation Between 70082LAB3 and American Express

Can any of the company-specific risk be diversified away by investing in both 70082LAB3 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 70082LAB3 and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US70082LAB36 and American Express, you can compare the effects of market volatilities on 70082LAB3 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 70082LAB3 with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of 70082LAB3 and American Express.

Diversification Opportunities for 70082LAB3 and American Express

0.57

Correlation Coefficient

70082LAB3  American Express

Very weak diversification

The 3 months correlation between 70082LAB3 and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding US70082LAB36 and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and 70082LAB3 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 US70082LAB36 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 70082LAB3 i.e., 70082LAB3 and American Express go up and down completely randomly.

Pair Corralation between 70082LAB3 and American Express

Assuming the 90 days trading horizon US70082LAB36 is expected to under-perform the American Express. In addition to that, 70082LAB3 is 2.99 times more volatile than American Express. It trades about -0.39 of its total potential returns per unit of risk. American Express is currently generating about 0.06 per unit of volatility. If you would invest  22,593  in American Express on February 3, 2024 and sell it today you would earn a total of  486.00  from holding American Express or generate 2.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	43.48%
Values	Daily Returns

US70082LAB36  vs.  American Express

US70082LAB36

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US70082LAB36 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for US70082LAB36 investors.

American Express

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 12 (%) 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.

Pair Trading with 70082LAB3 and American Express

The main advantage of trading using opposite 70082LAB3 and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 70082LAB3 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 US70082LAB36 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.