Correlation Between American Express and Seagen

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

Diversification Opportunities for American Express and Seagen

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between American and Seagen is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Seagen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagen Inc 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 Seagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagen Inc has no effect on the direction of American Express i.e., American Express and Seagen go up and down completely randomly.

Pair Corralation between American Express and Seagen

Considering the 90-day investment horizon American Express is expected to under-perform the Seagen. But the stock apears to be less risky and, when comparing its historical volatility, American Express is 1.26 times less risky than Seagen. The stock trades about -0.36 of its potential returns per unit of risk. The Seagen Inc is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  14,436  in Seagen Inc on April 8, 2022 and sell it today you would earn a total of  3,077  from holding Seagen Inc or generate 21.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  Seagen Inc

 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 abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0149
Payout Ratio
0.19
Last Split Factor
10000:8753
Forward Annual Dividend Rate
2.08
Dividend Date
2022-08-10
Ex Dividend Date
2022-06-30
Last Split Date
2005-10-03

American Price Channel

Seagen Inc 
Seagen Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Seagen Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady technical and fundamental indicators, Seagen disclosed solid returns over the last few months and may actually be approaching a breakup point.

Seagen Price Channel

American Express and Seagen Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with American Express and Seagen

The main advantage of trading using opposite American Express and Seagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Seagen 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 Seagen will offset losses from the drop in Seagen's long position.

American Express

Pair trading matchups for American Express

The idea behind American Express and Seagen Inc 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.
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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