Correlation Between American Express and IShares Trust
Can any of the company-specific risk be diversified away by investing in both American Express and IShares Trust 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 American Express and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and iShares Trust , you can compare the effects of market volatilities on American Express and IShares Trust 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 American Express with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and IShares Trust.
Diversification Opportunities for American Express and IShares Trust
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and IShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding American Express and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and American Express 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 American Express are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of American Express i.e., American Express and IShares Trust go up and down completely randomly.
Pair Corralation between American Express and IShares Trust
Assuming the 90 days trading horizon American Express is expected to generate 0.84 times more return on investment than IShares Trust. However, American Express is 1.19 times less risky than IShares Trust. It trades about 0.1 of its potential returns per unit of risk. iShares Trust is currently generating about 0.01 per unit of risk. If you would invest 306,075 in American Express on November 27, 2024 and sell it today you would earn a total of 300,551 from holding American Express or generate 98.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. iShares Trust
Performance |
| Timeline |
| American Express |
| iShares Trust |
American Express and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and IShares Trust
The main advantage of trading using opposite American Express and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| American Express vs. Capital One Financial | American Express vs. Burlington Stores | American Express vs. GMxico Transportes SAB | American Express vs. Cognizant Technology Solutions |
| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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