Correlation Between IShares Trust and American Express
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 Trust 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 Trust and American Express, you can compare the effects of market volatilities on IShares Trust 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 Trust with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and American Express.
Diversification Opportunities for IShares Trust and American Express
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and American is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and IShares Trust 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 Trust 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 Trust i.e., IShares Trust and American Express go up and down completely randomly.
Pair Corralation between IShares Trust and American Express
Assuming the 90 days trading horizon IShares Trust is expected to generate 1.49 times less return on investment than American Express. But when comparing it to its historical volatility, iShares Trust is 1.07 times less risky than American Express. It trades about 0.14 of its potential returns per unit of risk. American Express is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 298,557 in American Express on August 29, 2024 and sell it today you would earn a total of 329,443 from holding American Express or generate 110.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. American Express
Performance |
| Timeline |
| iShares Trust |
| American Express |
IShares Trust and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and American Express
The main advantage of trading using opposite IShares Trust and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
| American Express vs. McEwen Mining | American Express vs. DXC Technology | American Express vs. Delta Air Lines | American Express vs. Cognizant Technology Solutions |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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