Correlation Between American Express and Murphy Canyon

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

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

Diversification Opportunities for American Express and Murphy Canyon

0.76

Correlation Coefficient

American Express  Murphy Canyon

Poor diversification

The 3 months correlation between American and Murphy is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Murphy Canyon Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy Canyon Acquisition 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 Murphy Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murphy Canyon Acquisition has no effect on the direction of American Express i.e., American Express and Murphy Canyon go up and down completely randomly.

Pair Corralation between American Express and Murphy Canyon

If you would invest  26,150  in American Express on September 18, 2024 and sell it today you would earn a total of  4,207  from holding American Express or generate 16.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

American Express  vs.  Murphy Canyon Acquisition

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.

Murphy Canyon Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Murphy Canyon Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Murphy Canyon is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Express and Murphy Canyon

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

The idea behind American Express and Murphy Canyon Acquisition 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.