Correlation Between 345370BN9 and American Express

Can any of the company-specific risk be diversified away by investing in both 345370BN9 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 345370BN9 and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FORD MTR DEL and American Express, you can compare the effects of market volatilities on 345370BN9 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 345370BN9 with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of 345370BN9 and American Express.

Diversification Opportunities for 345370BN9 and American Express

-0.24

Correlation Coefficient

345370BN9  American Express

Very good diversification

The 3 months correlation between 345370BN9 and American is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding FORD MTR DEL and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and 345370BN9 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 FORD MTR DEL 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 345370BN9 i.e., 345370BN9 and American Express go up and down completely randomly.

Pair Corralation between 345370BN9 and American Express

If you would invest  22,533  in American Express on January 25, 2024 and sell it today you would earn a total of  1,363  from holding American Express or generate 6.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

FORD MTR DEL  vs.  American Express

FORD MTR DEL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORD MTR DEL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 345370BN9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 345370BN9 and American Express

The main advantage of trading using opposite 345370BN9 and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 345370BN9 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 FORD MTR DEL 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.