Correlation Between American Express and Innovator Buffer
Can any of the company-specific risk be diversified away by investing in both American Express and Innovator Buffer 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 Innovator Buffer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Innovator Buffer Step Up, you can compare the effects of market volatilities on American Express and Innovator Buffer 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 Innovator Buffer. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Innovator Buffer.
Diversification Opportunities for American Express and Innovator Buffer
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Innovator is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Innovator Buffer Step Up in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Buffer Step 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 Innovator Buffer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Buffer Step has no effect on the direction of American Express i.e., American Express and Innovator Buffer go up and down completely randomly.
Pair Corralation between American Express and Innovator Buffer
Considering the 90-day investment horizon American Express is expected to generate 3.85 times more return on investment than Innovator Buffer. However, American Express is 3.85 times more volatile than Innovator Buffer Step Up. It trades about 0.28 of its potential returns per unit of risk. Innovator Buffer Step Up is currently generating about 0.34 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 Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Innovator Buffer Step Up
Performance |
| Timeline |
| American Express |
| Innovator Buffer Step |
American Express and Innovator Buffer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Innovator Buffer
The main advantage of trading using opposite American Express and Innovator Buffer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Innovator Buffer 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 Innovator Buffer will offset losses from the drop in Innovator Buffer's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| Innovator Buffer vs. Innovator ETFs Trust | Innovator Buffer vs. First Trust Cboe | Innovator Buffer vs. Innovator SP 500 | Innovator Buffer vs. Innovator Equity Power |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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