Correlation Between Intel Corp and American Express

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

Diversification Opportunities for Intel Corp and American Express

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Intel and American is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Intel Corp and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Intel Corp 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 Intel Corp are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Intel Corp i.e., Intel Corp and American Express go up and down completely randomly.

Pair Corralation between Intel Corp and American Express

Given the investment horizon of 90 days Intel Corp is expected to under-perform the American Express. In addition to that, Intel Corp is 1.98 times more volatile than American Express. It trades about -0.08 of its total potential returns per unit of risk. American Express is currently generating about 0.54 per unit of volatility. If you would invest  14,233  in American Express on May 18, 2022 and sell it today you would earn a total of  2,307  from holding American Express or generate 16.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Intel Corp  vs.  American Express

 Performance (%) 
       Timeline  
Intel Corp 
Intel Performance
0 of 100
Over the last 90 days Intel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Intel Price Channel

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

American Price Channel

Intel Corp and American Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intel Corp and American Express

The main advantage of trading using opposite Intel Corp and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel Corp position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.
The idea behind Intel Corp and American Express 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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