Correlation Between Moelis and American Express
Can any of the company-specific risk be diversified away by investing in both Moelis 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 Moelis and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moelis Co and American Express, you can compare the effects of market volatilities on Moelis 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 Moelis with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moelis and American Express.
Diversification Opportunities for Moelis and American Express
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Moelis and American is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Moelis 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 Moelis Co 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 Moelis i.e., Moelis and American Express go up and down completely randomly.
Pair Corralation between Moelis and American Express
Allowing for the 90-day total investment horizon Moelis is expected to generate 1.33 times less return on investment than American Express. In addition to that, Moelis is 1.36 times more volatile than American Express. It trades about 0.04 of its total potential returns per unit of risk. American Express is currently generating about 0.07 per unit of volatility. If you would invest 15,186 in American Express on January 15, 2025 and sell it today you would earn a total of 10,352 from holding American Express or generate 68.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moelis Co vs. American Express
Performance |
| Timeline |
| Moelis |
| American Express |
Moelis and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moelis and American Express
The main advantage of trading using opposite Moelis and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis 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.The idea behind Moelis Co and American Express 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.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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