Correlation Between American Century and American Express

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

Diversification Opportunities for American Century and American Express

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between American and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Century Real and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and American Century 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 Century Real 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 American Century i.e., American Century and American Express go up and down completely randomly.

Pair Corralation between American Century and American Express

Assuming the 90 days horizon American Century Real is expected to under-perform the American Express. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Century Real is 1.18 times less risky than American Express. The mutual fund trades about -0.07 of its potential returns per unit of risk. The American Express is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  15,407  in American Express on August 30, 2022 and sell it today you would lose (320.00)  from holding American Express or give up 2.08% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.44%
ValuesDaily Returns

American Century Real  vs.  American Express

 Performance (%) 
       Timeline  
American Century Real 
American Performance
0 of 100
Over the last 90 days American Century Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

American Price Channel

American Express 
American Performance
0 of 100
Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, American Express is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

American Century and American Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Century and American Express

The main advantage of trading using opposite American Century and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century 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.
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The idea behind American Century Real 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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