Correlation Between American Express and 29449WAE7

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Can any of the company-specific risk be diversified away by investing in both American Express and 29449WAE7 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 29449WAE7 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and EQH 1 09 JAN 26, you can compare the effects of market volatilities on American Express and 29449WAE7 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 29449WAE7. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and 29449WAE7.

Diversification Opportunities for American Express and 29449WAE7

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between American and 29449WAE7 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Express and EQH 1 09 JAN 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 29449WAE7 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 29449WAE7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 29449WAE7 has no effect on the direction of American Express i.e., American Express and 29449WAE7 go up and down completely randomly.

Pair Corralation between American Express and 29449WAE7

Considering the 90-day investment horizon American Express is expected to generate 1.41 times more return on investment than 29449WAE7. However, American Express is 1.41 times more volatile than EQH 1 09 JAN 26. It trades about 0.1 of its potential returns per unit of risk. EQH 1 09 JAN 26 is currently generating about 0.06 per unit of risk. If you would invest  15,318  in American Express on September 2, 2024 and sell it today you would earn a total of  15,150  from holding American Express or generate 98.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy26.81%
ValuesDaily Returns

American Express  vs.  EQH 1 09 JAN 26

 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.
29449WAE7 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in EQH 1 09 JAN 26 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 29449WAE7 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

American Express and 29449WAE7 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and 29449WAE7

The main advantage of trading using opposite American Express and 29449WAE7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, 29449WAE7 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 29449WAE7 will offset losses from the drop in 29449WAE7's long position.
The idea behind American Express and EQH 1 09 JAN 26 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.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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