Correlation Between American Express and Lands End

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

Diversification Opportunities for American Express and Lands End

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between American and Lands is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End 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 Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of American Express i.e., American Express and Lands End go up and down completely randomly.

Pair Corralation between American Express and Lands End

Considering the 90-day investment horizon American Express is expected to generate 0.49 times more return on investment than Lands End. However, American Express is 2.02 times less risky than Lands End. It trades about -0.1 of its potential returns per unit of risk. Lands End is currently generating about -0.11 per unit of risk. If you would invest  18,766  in American Express on July 2, 2022 and sell it today you would lose (4,987)  from holding American Express or give up 26.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  Lands End

 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 new stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

Lands End 
Lands Performance
0 of 100
Over the last 90 days Lands End has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lands Price Channel

American Express and Lands End Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Lands End

The main advantage of trading using opposite American Express and Lands End positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Lands End 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 Lands End will offset losses from the drop in Lands End's long position.
American Express vs. Paypal Holdings
The idea behind American Express and Lands End 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.
Lands End vs. Best Buy Company
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 Global Correlations module to find global opportunities by holding instruments from different markets.

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