Correlation Between Oakmark International and American Express

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

Diversification Opportunities for Oakmark International and American Express

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Oakmark and American is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Small and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Oakmark International 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 Oakmark International Small 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 Oakmark International i.e., Oakmark International and American Express go up and down completely randomly.

Pair Corralation between Oakmark International and American Express

Assuming the 90 days horizon Oakmark International is expected to generate 21.73 times less return on investment than American Express. But when comparing it to its historical volatility, Oakmark International Small is 1.81 times less risky than American Express. It trades about 0.0 of its potential returns per unit of risk. American Express is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  10,134  in American Express on June 27, 2022 and sell it today you would earn a total of  3,892  from holding American Express or generate 38.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Oakmark International Small  vs.  American Express

 Performance (%) 
       Timeline  
Oakmark International 
Oakmark Performance
0 of 100
Over the last 90 days Oakmark International Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of sluggish performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the fund investors.

Oakmark Price Channel

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 new stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

Oakmark International and American Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oakmark International and American Express

The main advantage of trading using opposite Oakmark International and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International 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.
Oakmark International vs. JP Morgan Chase
The idea behind Oakmark International Small 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.
American Express vs. Sigma Lithium Corp
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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