Correlation Between American Express and ATT

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

Diversification Opportunities for American Express and ATT

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between American and ATT is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding American Express and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of American Express i.e., American Express and ATT go up and down completely randomly.

Pair Corralation between American Express and ATT

Considering the 90-day investment horizon American Express is expected to generate 1.53 times more return on investment than ATT. However, American Express is 1.53 times more volatile than ATT Inc. It trades about 0.06 of its potential returns per unit of risk. ATT Inc is currently generating about 0.0 per unit of risk. If you would invest  9,516  in American Express on May 9, 2022 and sell it today you would earn a total of  6,235  from holding American Express or generate 65.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  ATT 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 very healthy basic indicators, American Express is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

ATT Inc 
ATT Performance
0 of 100
Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ATT Price Channel

American Express and ATT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and ATT

The main advantage of trading using opposite American Express and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.
The idea behind American Express and ATT 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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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