Correlation Between ATT and American Express

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

Diversification Opportunities for ATT and American Express

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between ATT and American is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and ATT 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 ATT Inc 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 ATT i.e., ATT and American Express go up and down completely randomly.

Pair Corralation between ATT and American Express

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the American Express. In addition to that, ATT is 1.46 times more volatile than American Express. It trades about -0.27 of its total potential returns per unit of risk. American Express is currently generating about 0.53 per unit of volatility. If you would invest  14,248  in American Express on May 16, 2022 and sell it today you would earn a total of  2,336  from holding American Express or generate 16.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  American Express

 Performance (%) 
       Timeline  
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 latest sluggish performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ATT 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 sluggish basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in September 2022.

American Price Channel

ATT and American Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and American Express

The main advantage of trading using opposite ATT and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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 ATT Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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