Correlation Between American Express and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both American Express and AstraZeneca PLC 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 AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and AstraZeneca PLC ADR, you can compare the effects of market volatilities on American Express and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and AstraZeneca PLC.
Diversification Opportunities for American Express and AstraZeneca PLC
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and AstraZeneca is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Express and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of American Express i.e., American Express and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between American Express and AstraZeneca PLC
Considering the 90-day investment horizon American Express is expected to generate 0.94 times more return on investment than AstraZeneca PLC. However, American Express is 1.07 times less risky than AstraZeneca PLC. It trades about 0.28 of its potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about -0.11 per unit of risk. If you would invest 27,269 in American Express on September 2, 2024 and sell it today you would earn a total of 3,199 from holding American Express or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. AstraZeneca PLC ADR
Performance |
| Timeline |
| American Express |
| AstraZeneca PLC ADR |
American Express and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and AstraZeneca PLC
The main advantage of trading using opposite American Express and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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