Correlation Between American Express and Select Fund

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

By analyzing existing cross correlation between American Express and Select Fund R6, you can compare the effects of market volatilities on American Express and Select Fund 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 Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Select Fund.

Diversification Opportunities for American Express and Select Fund

0.84

Correlation Coefficient

American Express  Select Fund

Very poor diversification

The 3 months correlation between American and Select is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Select Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund R6 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 Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund R6 has no effect on the direction of American Express i.e., American Express and Select Fund go up and down completely randomly.

Pair Corralation between American Express and Select Fund

Considering the 90-day investment horizon American Express is expected to generate 1.99 times less return on investment than Select Fund. In addition to that, American Express is 1.58 times more volatile than Select Fund R6. It trades about 0.07 of its total potential returns per unit of risk. Select Fund R6 is currently generating about 0.22 per unit of volatility. If you would invest  11,758  in Select Fund R6 on May 5, 2025 and sell it today you would earn a total of  1,628  from holding Select Fund R6 or generate 13.85% return on investment over 90 days.

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

American Express  vs.  Select Fund R6

American Express

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Select Fund R6

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Select Fund R6 are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Select Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Express and Select Fund

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

The idea behind American Express and Select Fund R6 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.