Correlation Between IShares Core and American Express
Can any of the company-specific risk be diversified away by investing in both IShares Core and American Express 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 IShares Core and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and American Express, you can compare the effects of market volatilities on IShares Core and American Express 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 IShares Core with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and American Express.
Diversification Opportunities for IShares Core and American Express
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and American is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and IShares Core 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 iShares Core MSCI are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of IShares Core i.e., IShares Core and American Express go up and down completely randomly.
Pair Corralation between IShares Core and American Express
Given the investment horizon of 90 days IShares Core is expected to generate 3.2 times less return on investment than American Express. But when comparing it to its historical volatility, iShares Core MSCI is 1.72 times less risky than American Express. It trades about 0.06 of its potential returns per unit of risk. American Express is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 14,316 in American Express on September 13, 2024 and sell it today you would earn a total of 15,918 from holding American Express or generate 111.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. American Express
Performance |
| Timeline |
| iShares Core MSCI |
| American Express |
IShares Core and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and American Express
The main advantage of trading using opposite IShares Core and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| IShares Core vs. Vanguard FTSE Pacific | IShares Core vs. abrdn Bloomberg All | IShares Core vs. BTCI | IShares Core vs. Intel |
| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Upstart Holdings | American Express vs. Mastercard |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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