Correlation Between American Express and Nuveen New

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

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

Diversification Opportunities for American Express and Nuveen New

-0.51

Correlation Coefficient

American Express  Nuveen New

Excellent diversification

The 3 months correlation between American and Nuveen is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Nuveen New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen New York 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 Nuveen New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen New York has no effect on the direction of American Express i.e., American Express and Nuveen New go up and down completely randomly.

Pair Corralation between American Express and Nuveen New

Considering the 90-day investment horizon American Express is expected to generate 2.65 times more return on investment than Nuveen New. However, American Express is 2.65 times more volatile than Nuveen New York. It trades about 0.1 of its potential returns per unit of risk. Nuveen New York is currently generating about 0.03 per unit of risk. If you would invest  15,318  in American Express on September 1, 2024 and sell it today you would earn a total of  15,150  from holding American Express or generate 98.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

American Express  vs.  Nuveen New York

American Express

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.

Nuveen New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen New is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Express and Nuveen New

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

The idea behind American Express and Nuveen New York 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.