Correlation Between American Express and IShares Core
Can any of the company-specific risk be diversified away by investing in both American Express and IShares Core 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 Core 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 Core SP, you can compare the effects of market volatilities on American Express and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and IShares Core.
Diversification Opportunities for American Express and IShares Core
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Express and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of American Express i.e., American Express and IShares Core go up and down completely randomly.
Pair Corralation between American Express and IShares Core
Considering the 90-day investment horizon American Express is expected to generate 1.59 times more return on investment than IShares Core. However, American Express is 1.59 times more volatile than iShares Core SP. It trades about 0.28 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.26 per unit of risk. If you would invest 27,043 in American Express on August 30, 2024 and sell it today you would earn a total of 3,382 from holding American Express or generate 12.51% 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. iShares Core SP
Performance |
| Timeline |
| American Express |
| iShares Core SP |
American Express and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and IShares Core
The main advantage of trading using opposite American Express and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. Discover Financial Services |
| IShares Core vs. JPMorgan Fundamental Data | IShares Core vs. Vanguard Mid Cap Index | IShares Core vs. SPDR SP 400 | IShares Core vs. SPDR SP 400 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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