Correlation Between American Express and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both American Express and IShares MSCI 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 MSCI 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 MSCI United, you can compare the effects of market volatilities on American Express and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and IShares MSCI.
Diversification Opportunities for American Express and IShares MSCI
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and IShares is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Express and iShares MSCI United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI United 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI United has no effect on the direction of American Express i.e., American Express and IShares MSCI go up and down completely randomly.
Pair Corralation between American Express and IShares MSCI
Considering the 90-day investment horizon American Express is expected to generate 2.42 times more return on investment than IShares MSCI. However, American Express is 2.42 times more volatile than iShares MSCI United. It trades about 0.29 of its potential returns per unit of risk. iShares MSCI United is currently generating about -0.15 per unit of risk. If you would invest 26,735 in American Express on August 26, 2024 and sell it today you would earn a total of 3,395 from holding American Express or generate 12.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. iShares MSCI United
Performance |
| Timeline |
| American Express |
| iShares MSCI United |
American Express and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and IShares MSCI
The main advantage of trading using opposite American Express and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
| IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. HUMANA INC | IShares MSCI vs. SCOR PK | IShares MSCI vs. Aquagold International |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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