Correlation Between American Express and Global X

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

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

Diversification Opportunities for American Express and Global X

-0.61

Correlation Coefficient

American Express  Global X

Excellent diversification

The 3 months correlation between American and Global is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Global X Psychedelic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Psychedelic 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Psychedelic has no effect on the direction of American Express i.e., American Express and Global X go up and down completely randomly.

Pair Corralation between American Express and Global X

Considering the 90-day investment horizon American Express is expected to generate 2.25 times less return on investment than Global X. But when comparing it to its historical volatility, American Express is 4.9 times less risky than Global X. It trades about 0.1 of its potential returns per unit of risk. Global X Psychedelic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  559.00  in Global X Psychedelic on September 20, 2024 and sell it today you would earn a total of  11.00  from holding Global X Psychedelic or generate 1.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	7.46%
Values	Daily Returns

American Express  vs.  Global X Psychedelic

American Express

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Psychedelic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Psychedelic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Global X is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American Express and Global X

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

The idea behind American Express and Global X Psychedelic 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.