Correlation Between American Express and Zoetis Inc

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

Diversification Opportunities for American Express and Zoetis Inc

0.74
  Correlation Coefficient

Poor diversification

The 24 months correlation between American and Zoetis is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Zoetis Inc Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoetis Inc Cl 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 Zoetis Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoetis Inc Cl has no effect on the direction of American Express i.e., American Express and Zoetis Inc go up and down completely randomly.

Pair Corralation between American Express and Zoetis Inc

Considering the 90-day investment horizon American Express is expected to under-perform the Zoetis Inc. In addition to that, American Express is 1.27 times more volatile than Zoetis Inc Cl. It trades about -0.16 of its total potential returns per unit of risk. Zoetis Inc Cl is currently generating about 0.0 per unit of volatility. If you would invest  17,514  in Zoetis Inc Cl on April 3, 2022 and sell it today you would lose (93.00)  from holding Zoetis Inc Cl or give up 0.53% of portfolio value over 90 days.
Time Period24 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  Zoetis Inc Cl

 Performance (%) 
      Timeline 
American Express 
American Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.015
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

Zoetis Inc Cl 
Zoetis Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Zoetis Inc Cl are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Zoetis Inc is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0075
Payout Ratio
0.26
Forward Annual Dividend Rate
1.3
Dividend Date
2022-09-01
Ex Dividend Date
2022-07-20

Zoetis Price Channel

American Express and Zoetis Inc Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with American Express and Zoetis Inc

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

American Express

Pair trading matchups for American Express

The idea behind American Express and Zoetis Inc Cl 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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