Correlation Between American Express and Bellus Health

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

Diversification Opportunities for American Express and Bellus Health

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between American and Bellus is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Bellus Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellus Health 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 Bellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellus Health has no effect on the direction of American Express i.e., American Express and Bellus Health go up and down completely randomly.

Pair Corralation between American Express and Bellus Health

Considering the 90-day investment horizon American Express is expected to generate 4.46 times less return on investment than Bellus Health. But when comparing it to its historical volatility, American Express is 2.31 times less risky than Bellus Health. It trades about 0.03 of its potential returns per unit of risk. Bellus Health is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  326.00  in Bellus Health on August 29, 2022 and sell it today you would earn a total of  584.00  from holding Bellus Health or generate 179.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  Bellus Health

 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

Bellus Health 
Bellus Performance
0 of 100
Over the last 90 days Bellus Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in December 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bellus Price Channel

American Express and Bellus Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Bellus Health

The main advantage of trading using opposite American Express and Bellus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Bellus Health 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 Bellus Health will offset losses from the drop in Bellus Health's long position.
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The idea behind American Express and Bellus Health 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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