Correlation Between American Express and Perella Weinberg

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

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

Diversification Opportunities for American Express and Perella Weinberg

0.92

Correlation Coefficient

American Express  Perella Weinberg

Almost no diversification

The 3 months correlation between American and Perella is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Perella Weinberg Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perella Weinberg Partners 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 Perella Weinberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perella Weinberg Partners has no effect on the direction of American Express i.e., American Express and Perella Weinberg go up and down completely randomly.

Pair Corralation between American Express and Perella Weinberg

Considering the 90-day investment horizon American Express is expected to generate 1.67 times less return on investment than Perella Weinberg. But when comparing it to its historical volatility, American Express is 1.82 times less risky than Perella Weinberg. It trades about 0.16 of its potential returns per unit of risk. Perella Weinberg Partners is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,948  in Perella Weinberg Partners on August 30, 2024 and sell it today you would earn a total of  592.00  from holding Perella Weinberg Partners or generate 30.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

American Express  vs.  Perella Weinberg Partners

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 unfluctuating basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.

Perella Weinberg Partners

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perella Weinberg Partners are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Perella Weinberg reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Express and Perella Weinberg

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

The idea behind American Express and Perella Weinberg Partners 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.