Correlation Between American Express and NOVARTIS

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both American Express and NOVARTIS 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 NOVARTIS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and NOVARTIS CAP P, you can compare the effects of market volatilities on American Express and NOVARTIS 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 NOVARTIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and NOVARTIS.

Diversification Opportunities for American Express and NOVARTIS

AmericanNOVARTISDiversified AwayAmericanNOVARTISDiversified Away100%
0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between American and NOVARTIS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding American Express and NOVARTIS CAP P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVARTIS CAP P 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 NOVARTIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVARTIS CAP P has no effect on the direction of American Express i.e., American Express and NOVARTIS go up and down completely randomly.

Pair Corralation between American Express and NOVARTIS

Considering the 90-day investment horizon American Express is expected to under-perform the NOVARTIS. In addition to that, American Express is 1.88 times more volatile than NOVARTIS CAP P. It trades about -0.36 of its total potential returns per unit of risk. NOVARTIS CAP P is currently generating about -0.2 per unit of volatility. If you would invest  9,704  in NOVARTIS CAP P on November 25, 2024 and sell it today you would lose (244.00) from holding NOVARTIS CAP P or give up 2.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

American Express  vs.  NOVARTIS CAP P

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510
JavaScript chart by amCharts 3.21.15AXP 66989HAN8
       Timeline  
American Express 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American Express is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb285290295300305310315320325
NOVARTIS CAP P 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days NOVARTIS CAP P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NOVARTIS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15312360259595.59696.59797.5

American Express and NOVARTIS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.42-3.31-2.2-1.090.01881.132.263.394.52 0.51.01.52.0
JavaScript chart by amCharts 3.21.15AXP 66989HAN8
       Returns  

Pair Trading with American Express and NOVARTIS

The main advantage of trading using opposite American Express and NOVARTIS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, NOVARTIS 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 NOVARTIS will offset losses from the drop in NOVARTIS's long position.
The idea behind American Express and NOVARTIS CAP P 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

Other Complementary Tools

Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
CEOs Directory
Screen CEOs from public companies around the world