Correlation Between National Security and American International

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Can any of the company-specific risk be diversified away by investing in both National Security and American International 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 National Security and American International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Security Group and American International Group, you can compare the effects of market volatilities on National Security and American International 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 National Security with a short position of American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Security and American International.

Diversification Opportunities for National Security and American International

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between National and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Security Group and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International and National Security 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 National Security Group are associated (or correlated) with American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of National Security i.e., National Security and American International go up and down completely randomly.

Pair Corralation between National Security and American International

If you would invest  6,743  in American International Group on December 29, 2023 and sell it today you would earn a total of  1,074  from holding American International Group or generate 15.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy1.61%
ValuesDaily Returns

National Security Group  vs.  American International Group

 Performance 
       Timeline  
National Security 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days National Security Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, National Security is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
American International 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in American International Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, American International reported solid returns over the last few months and may actually be approaching a breakup point.

National Security and American International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National Security and American International

The main advantage of trading using opposite National Security and American International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Security position performs unexpectedly, American International 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 International will offset losses from the drop in American International's long position.
The idea behind National Security Group and American International Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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