Correlation Between Trinity Bio and American Express

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

Diversification Opportunities for Trinity Bio and American Express

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Trinity and American is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Trinity Bio ADR and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Trinity Bio 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 Trinity Bio ADR 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 Trinity Bio i.e., Trinity Bio and American Express go up and down completely randomly.

Pair Corralation between Trinity Bio and American Express

Given the investment horizon of 90 days Trinity Bio ADR is expected to generate 1.86 times more return on investment than American Express. However, Trinity Bio is 1.86 times more volatile than American Express. It trades about 0.12 of its potential returns per unit of risk. American Express is currently generating about -0.06 per unit of risk. If you would invest  92.00  in Trinity Bio ADR on April 7, 2022 and sell it today you would earn a total of  38.00  from holding Trinity Bio ADR or generate 41.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Trinity Bio ADR  vs.  American Express

 Performance (%) 
      Timeline 
Trinity Bio ADR 
Trinity Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Trinity Bio ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, Trinity Bio sustained solid returns over the last few months and may actually be approaching a breakup point.

Structure and Payout Changes

Last Split Factor
1:4
Dividend Date
2015-07-01
Ex Dividend Date
2015-06-05
Last Split Date
2005-06-02

Trinity 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 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

Trinity Bio and American Express Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Trinity Bio and American Express

The main advantage of trading using opposite Trinity Bio and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trinity Bio 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 Trinity Bio ADR 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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