Correlation Between American Express and Goliath Film

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Can any of the company-specific risk be diversified away by investing in both American Express and Goliath Film 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 Goliath Film into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Goliath Film and, you can compare the effects of market volatilities on American Express and Goliath Film 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 Goliath Film. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Goliath Film.

Diversification Opportunities for American Express and Goliath Film

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between American and Goliath is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Goliath Film and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goliath Film 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 Goliath Film. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goliath Film has no effect on the direction of American Express i.e., American Express and Goliath Film go up and down completely randomly.

Pair Corralation between American Express and Goliath Film

Considering the 90-day investment horizon American Express is expected to generate 0.23 times more return on investment than Goliath Film. However, American Express is 4.26 times less risky than Goliath Film. It trades about 0.13 of its potential returns per unit of risk. Goliath Film and is currently generating about 0.01 per unit of risk. If you would invest  23,556  in American Express on September 1, 2024 and sell it today you would earn a total of  6,912  from holding American Express or generate 29.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.21%
ValuesDaily Returns

American Express  vs.  Goliath Film and

 Performance 
       Timeline  
American Express 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.
Goliath Film 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Goliath Film and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

American Express and Goliath Film Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Goliath Film

The main advantage of trading using opposite American Express and Goliath Film positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Goliath Film 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 Goliath Film will offset losses from the drop in Goliath Film's long position.
The idea behind American Express and Goliath Film and 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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