Correlation Between American Express and Xtrackers MSCI

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

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

Diversification Opportunities for American Express and Xtrackers MSCI

0.68

Correlation Coefficient

American Express  Xtrackers MSCI

Poor diversification

The 3 months correlation between American and Xtrackers is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Xtrackers MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Europe 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Europe has no effect on the direction of American Express i.e., American Express and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between American Express and Xtrackers MSCI

Considering the 90-day investment horizon American Express is expected to generate 2.27 times more return on investment than Xtrackers MSCI. However, American Express is 2.27 times more volatile than Xtrackers MSCI Europe. It trades about 0.08 of its potential returns per unit of risk. Xtrackers MSCI Europe is currently generating about 0.07 per unit of risk. If you would invest  27,468  in American Express on May 6, 2025 and sell it today you would earn a total of  1,959  from holding American Express or generate 7.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

American Express  vs.  Xtrackers MSCI Europe

American Express

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 6 (%) 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.

Xtrackers MSCI Europe

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI Europe are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Xtrackers MSCI is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Express and Xtrackers MSCI

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

The idea behind American Express and Xtrackers MSCI Europe 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.