Correlation Between American Express and Income Fund

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

Diversification Opportunities for American Express and Income Fund

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between American and Income is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Express and The Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund 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 Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund has no effect on the direction of American Express i.e., American Express and Income Fund go up and down completely randomly.

Pair Corralation between American Express and Income Fund

Considering the 90-day investment horizon American Express is expected to generate 1.23 times less return on investment than Income Fund. In addition to that, American Express is 2.42 times more volatile than The Income Fund. It trades about 0.11 of its total potential returns per unit of risk. The Income Fund is currently generating about 0.33 per unit of volatility. If you would invest  2,251  in The Income Fund on August 28, 2022 and sell it today you would earn a total of  141.00  from holding The Income Fund or generate 6.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

American Express  vs.  The Income Fund

 Performance (%) 
       Timeline  
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

Income Fund 
Income Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Income Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Income Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Income Price Channel

American Express and Income Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Income Fund

The main advantage of trading using opposite American Express and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Income Fund 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 Income Fund will offset losses from the drop in Income Fund's long position.
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The idea behind American Express and The Income Fund 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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