Correlation Between BlackRock and American Express
Can any of the company-specific risk be diversified away by investing in both BlackRock 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 BlackRock and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock and American Express, you can compare the effects of market volatilities on BlackRock 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 BlackRock with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and American Express.
Diversification Opportunities for BlackRock and American Express
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlackRock and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and BlackRock 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 BlackRock 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 BlackRock i.e., BlackRock and American Express go up and down completely randomly.
Pair Corralation between BlackRock and American Express
Considering the 90-day investment horizon BlackRock is expected to generate 1.22 times more return on investment than American Express. However, BlackRock is 1.22 times more volatile than American Express. It trades about 0.16 of its potential returns per unit of risk. American Express is currently generating about 0.18 per unit of risk. If you would invest 79,560 in BlackRock on December 29, 2023 and sell it today you would earn a total of 3,810 from holding BlackRock or generate 4.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BlackRock vs. American Express
Performance |
Timeline |
BlackRock |
American Express |
BlackRock and American Express Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BlackRock and American Express
The main advantage of trading using opposite BlackRock and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock 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.BlackRock vs. Talis Biomedical Corp | BlackRock vs. BorgWarner | BlackRock vs. Catalent | BlackRock vs. Microbot Medical |
American Express vs. Visa Class A | American Express vs. Diamond Hill Investment | American Express vs. Nocturne Acquisition Corp | American Express vs. Mountain I Acquisition |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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