Correlation Between Nocturne Acquisition and American Express

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

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

Diversification Opportunities for Nocturne Acquisition and American Express

-0.22

Correlation Coefficient

Nocturne Acquisition  American Express

Very good diversification

The 3 months correlation between Nocturne and American is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nocturne Acquisition Corp and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Nocturne Acquisition 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 Nocturne Acquisition Corp 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 Nocturne Acquisition i.e., Nocturne Acquisition and American Express go up and down completely randomly.

Pair Corralation between Nocturne Acquisition and American Express

Given the investment horizon of 90 days Nocturne Acquisition Corp is expected to generate 3.37 times more return on investment than American Express. However, Nocturne Acquisition is 3.37 times more volatile than American Express. It trades about 0.1 of its potential returns per unit of risk. American Express is currently generating about 0.14 per unit of risk. If you would invest  1,050  in Nocturne Acquisition Corp on January 28, 2024 and sell it today you would earn a total of  116.00  from holding Nocturne Acquisition Corp or generate 11.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.91%
Values	Daily Returns

Nocturne Acquisition Corp  vs.  American Express

Nocturne Acquisition Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Nocturne Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Nocturne Acquisition exhibited solid returns over the last few months and may actually be approaching a breakup point.

American Express

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nocturne Acquisition and American Express

The main advantage of trading using opposite Nocturne Acquisition and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nocturne Acquisition 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 Nocturne Acquisition Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.