Correlation Between American Express and Conyers Park

Can any of the company-specific risk be diversified away by investing in both American Express and Conyers Park 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 Conyers Park into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Express and Conyers Park III, you can compare the effects of market volatilities on American Express and Conyers Park 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 Conyers Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Conyers Park.

Diversification Opportunities for American Express and Conyers Park

-0.81

Correlation Coefficient

American Express  Conyers Park

Pay attention - limited upside

The 3 months correlation between American and Conyers is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Conyers Park III in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conyers Park III 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 Conyers Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conyers Park III has no effect on the direction of American Express i.e., American Express and Conyers Park go up and down completely randomly.

Pair Corralation between American Express and Conyers Park

If you would invest  26,041  in American Express on September 16, 2024 and sell it today you would earn a total of  4,173  from holding American Express or generate 16.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

American Express  vs.  Conyers Park III

American Express

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.

Conyers Park III

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conyers Park III has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Conyers Park is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with American Express and Conyers Park

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

The idea behind American Express and Conyers Park III 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.

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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 the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.