Correlation Between American Express and Raymond James

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

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

Diversification Opportunities for American Express and Raymond James

0.86

Correlation Coefficient

American Express  Raymond James

Very poor diversification

The 3 months correlation between American and Raymond is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Raymond James Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raymond James Financial 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 Raymond James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raymond James Financial has no effect on the direction of American Express i.e., American Express and Raymond James go up and down completely randomly.

Pair Corralation between American Express and Raymond James

Considering the 90-day investment horizon American Express is expected to generate 0.95 times more return on investment than Raymond James. However, American Express is 1.05 times less risky than Raymond James. It trades about 0.09 of its potential returns per unit of risk. Raymond James Financial is currently generating about 0.05 per unit of risk. If you would invest  15,337  in American Express on August 22, 2024 and sell it today you would earn a total of  13,218  from holding American Express or generate 86.18% 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.  Raymond James Financial

American Express

Risk-Adjusted Performance

11 of 100

Good

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

Raymond James Financial

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raymond James Financial are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward-looking indicators, Raymond James reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Express and Raymond James

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

The idea behind American Express and Raymond James Financial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.