Correlation Between American Express and Astronics

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

Diversification Opportunities for American Express and Astronics

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between American and Astronics is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics 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 Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of American Express i.e., American Express and Astronics go up and down completely randomly.

Pair Corralation between American Express and Astronics

Considering the 90-day investment horizon American Express is expected to generate 0.59 times more return on investment than Astronics. However, American Express is 1.68 times less risky than Astronics. It trades about 0.04 of its potential returns per unit of risk. Astronics is currently generating about 0.0 per unit of risk. If you would invest  11,622  in American Express on September 6, 2022 and sell it today you would earn a total of  4,053  from holding American Express or generate 34.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

American Express  vs.  Astronics

 Performance (%) 
       Timeline  
American Express 
American Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in January 2023.

American Price Channel

Astronics 
Astronics Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Astronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Astronics may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Astronics Price Channel

American Express and Astronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Astronics

The main advantage of trading using opposite American Express and Astronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Astronics 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 Astronics will offset losses from the drop in Astronics' long position.
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The idea behind American Express and Astronics 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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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