Correlation Between Polledo SA and American Express

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

By analyzing existing cross correlation between Polledo SA and American Express Co, you can compare the effects of market volatilities on Polledo SA and American Express 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 Polledo SA with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polledo SA and American Express.

Diversification Opportunities for Polledo SA and American Express

0.04

Correlation Coefficient

Polledo SA  American Express

Significant diversification

The 3 months correlation between Polledo and American is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Polledo SA and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Polledo SA 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 Polledo SA are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Polledo SA i.e., Polledo SA and American Express go up and down completely randomly.

Pair Corralation between Polledo SA and American Express

Assuming the 90 days trading horizon Polledo SA is expected to under-perform the American Express. In addition to that, Polledo SA is 1.01 times more volatile than American Express Co. It trades about -0.05 of its total potential returns per unit of risk. American Express Co is currently generating about 0.05 per unit of volatility. If you would invest  1,956,700  in American Express Co on September 17, 2024 and sell it today you would earn a total of  240,800  from holding American Express Co or generate 12.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Polledo SA  vs.  American Express Co

Polledo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polledo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

American Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Express Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, American Express is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Polledo SA and American Express

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

The idea behind Polledo SA and American Express Co 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.