Correlation Between Alphabet and American Express

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

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

Diversification Opportunities for Alphabet and American Express

0.88

Correlation Coefficient

Alphabet  American Express

Very poor diversification

The 3 months correlation between Alphabet and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A CEDEAR and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Alphabet 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 Alphabet Inc Class A CEDEAR 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 Alphabet i.e., Alphabet and American Express go up and down completely randomly.

Pair Corralation between Alphabet and American Express

Assuming the 90 days trading horizon Alphabet Inc Class A CEDEAR is expected to generate 1.04 times more return on investment than American Express. However, Alphabet is 1.04 times more volatile than American Express Co. It trades about 0.22 of its potential returns per unit of risk. American Express Co is currently generating about 0.19 per unit of risk. If you would invest  317,000  in Alphabet Inc Class A CEDEAR on April 23, 2025 and sell it today you would earn a total of  103,500  from holding Alphabet Inc Class A CEDEAR or generate 32.65% return on investment over 90 days.

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

Alphabet Inc Class A CEDEAR  vs.  American Express Co

Alphabet Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A CEDEAR are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Alphabet sustained solid returns over the last few months and may actually be approaching a breakup point.

American Express

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Express Co are ranked lower than 14 (%) 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.

Pair Trading with Alphabet and American Express

The main advantage of trading using opposite Alphabet and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class A CEDEAR 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.