Correlation Between American Express and Distribuidora

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

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

Diversification Opportunities for American Express and Distribuidora

0.2

Correlation Coefficient

American Express  Distribuidora

Modest diversification

The 3 months correlation between American and Distribuidora is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co and Distribuidora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora de Gas 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 Co are associated (or correlated) with Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora de Gas has no effect on the direction of American Express i.e., American Express and Distribuidora go up and down completely randomly.

Pair Corralation between American Express and Distribuidora

Assuming the 90 days trading horizon American Express Co is expected to generate 0.61 times more return on investment than Distribuidora. However, American Express Co is 1.63 times less risky than Distribuidora. It trades about 0.15 of its potential returns per unit of risk. Distribuidora de Gas is currently generating about 0.05 per unit of risk. If you would invest  2,145,000  in American Express Co on April 24, 2025 and sell it today you would earn a total of  425,000  from holding American Express Co or generate 19.81% return on investment over 90 days.

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

American Express Co  vs.  Distribuidora de Gas

American Express

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, American Express sustained solid returns over the last few months and may actually be approaching a breakup point.

Distribuidora de Gas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Distribuidora de Gas are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Distribuidora may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with American Express and Distribuidora

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

The idea behind American Express Co and Distribuidora de Gas 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 Stocks Directory module to find actively traded stocks across global markets.