Correlation Between American Express and US Treasury

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

By analyzing existing cross correlation between American Express and US Treasury 6, you can compare the effects of market volatilities on American Express and US Treasury 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 US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and US Treasury.

Diversification Opportunities for American Express and US Treasury

0.74

Correlation Coefficient

American Express  US Treasury

Poor diversification

The 3 months correlation between American and XBIL is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Express and US Treasury 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 6 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 US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 6 has no effect on the direction of American Express i.e., American Express and US Treasury go up and down completely randomly.

Pair Corralation between American Express and US Treasury

Considering the 90-day investment horizon American Express is expected to generate 65.64 times more return on investment than US Treasury. However, American Express is 65.64 times more volatile than US Treasury 6. It trades about 0.09 of its potential returns per unit of risk. US Treasury 6 is currently generating about 0.7 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  2,391  from holding American Express or generate 8.7% return on investment over 90 days.

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

American Express  vs.  US Treasury 6

American Express

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 7 (%) 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.

US Treasury 6

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in US Treasury 6 are ranked lower than 54 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, US Treasury is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with American Express and US Treasury

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

The idea behind American Express and US Treasury 6 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.