Correlation Between American Express and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both American Express and IShares Consumer 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 Consumer 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 Consumer Discretionary, you can compare the effects of market volatilities on American Express and IShares Consumer 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 Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and IShares Consumer.
Diversification Opportunities for American Express and IShares Consumer
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Express and iShares Consumer Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Dis 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 Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Dis has no effect on the direction of American Express i.e., American Express and IShares Consumer go up and down completely randomly.
Pair Corralation between American Express and IShares Consumer
Considering the 90-day investment horizon American Express is expected to generate 1.99 times more return on investment than IShares Consumer. However, American Express is 1.99 times more volatile than iShares Consumer Discretionary. It trades about 0.18 of its potential returns per unit of risk. iShares Consumer Discretionary is currently generating about 0.24 per unit of risk. If you would invest 26,548 in American Express on August 26, 2024 and sell it today you would earn a total of 3,582 from holding American Express or generate 13.49% 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 Consumer Discretionary
Performance |
| Timeline |
| American Express |
| iShares Consumer Dis |
American Express and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and IShares Consumer
The main advantage of trading using opposite American Express and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, IShares Consumer 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 Consumer will offset losses from the drop in IShares Consumer'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 Consumer vs. VanEck Pharmaceutical ETF | IShares Consumer vs. VanEck Biotech ETF | IShares Consumer vs. VanEck Oil Services | IShares Consumer vs. iShares Transportation Average |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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