Correlation Between American Express and Vertex Pharmaceutic

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both American Express and Vertex Pharmaceutic 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 Vertex Pharmaceutic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Vertex Pharmaceutic, you can compare the effects of market volatilities on American Express and Vertex Pharmaceutic 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 Vertex Pharmaceutic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Vertex Pharmaceutic.

Diversification Opportunities for American Express and Vertex Pharmaceutic

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between American and Vertex is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Vertex Pharmaceutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex Pharmaceutic 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 Vertex Pharmaceutic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex Pharmaceutic has no effect on the direction of American Express i.e., American Express and Vertex Pharmaceutic go up and down completely randomly.

Pair Corralation between American Express and Vertex Pharmaceutic

Considering the 90-day investment horizon American Express is expected to generate 1.1 times more return on investment than Vertex Pharmaceutic. However, American Express is 1.1 times more volatile than Vertex Pharmaceutic. It trades about 0.05 of its potential returns per unit of risk. Vertex Pharmaceutic is currently generating about 0.01 per unit of risk. If you would invest  9,127  in American Express on April 4, 2022 and sell it today you would earn a total of  4,913  from holding American Express or generate 53.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  Vertex Pharmaceutic

 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 weak 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
0.0148
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

Vertex Pharmaceutic 
Vertex Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vertex Pharmaceutic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Vertex Pharmaceutic may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Structure and Payout Changes

Last Split Factor
2:1
Last Split Date
2000-08-24

Vertex Price Channel

American Express and Vertex Pharmaceutic Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with American Express and Vertex Pharmaceutic

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

American Express

Pair trading matchups for American Express

The idea behind American Express and Vertex Pharmaceutic 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

Other Complementary Tools

Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go