Correlation Between Ashford and American Express

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

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

Diversification Opportunities for Ashford and American Express

0.15

Correlation Coefficient

Ashford  American Express

Average diversification

The 3 months correlation between Ashford and American is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ashford and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Ashford 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 Ashford 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 Ashford i.e., Ashford and American Express go up and down completely randomly.

Pair Corralation between Ashford and American Express

Given the investment horizon of 90 days Ashford is expected to generate 14.06 times more return on investment than American Express. However, Ashford is 14.06 times more volatile than American Express. It trades about 0.21 of its potential returns per unit of risk. American Express is currently generating about 0.18 per unit of risk. If you would invest  225.00  in Ashford on January 25, 2024 and sell it today you would earn a total of  255.00  from holding Ashford or generate 113.33% return on investment over 90 days.

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

Ashford  vs.  American Express

Ashford

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ashford are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ashford exhibited solid returns over the last few months and may actually be approaching a breakup point.

American Express

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 20 (%) 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 Ashford and American Express

The main advantage of trading using opposite Ashford and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford 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 Ashford 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.