Correlation Between American Express and IShares Morningstar
Can any of the company-specific risk be diversified away by investing in both American Express and IShares Morningstar 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 Morningstar 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 Morningstar Growth, you can compare the effects of market volatilities on American Express and IShares Morningstar 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 Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and IShares Morningstar.
Diversification Opportunities for American Express and IShares Morningstar
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Express and iShares Morningstar Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar 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 Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar has no effect on the direction of American Express i.e., American Express and IShares Morningstar go up and down completely randomly.
Pair Corralation between American Express and IShares Morningstar
Considering the 90-day investment horizon American Express is expected to generate 1.36 times more return on investment than IShares Morningstar. However, American Express is 1.36 times more volatile than iShares Morningstar Growth. It trades about 0.13 of its potential returns per unit of risk. iShares Morningstar Growth is currently generating about 0.11 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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Express vs. iShares Morningstar Growth
Performance |
| Timeline |
| American Express |
| iShares Morningstar |
American Express and IShares Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and IShares Morningstar
The main advantage of trading using opposite American Express and IShares Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, IShares Morningstar 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 Morningstar will offset losses from the drop in IShares Morningstar's long position.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
| IShares Morningstar vs. Vanguard Growth Index | IShares Morningstar vs. iShares Russell 1000 | IShares Morningstar vs. iShares SP 500 | IShares Morningstar vs. iShares Core SP |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |