Correlation Between CN MODERN and American Eagle
Can any of the company-specific risk be diversified away by investing in both CN MODERN and American Eagle 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 CN MODERN and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and American Eagle Outfitters, you can compare the effects of market volatilities on CN MODERN and American Eagle 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 CN MODERN with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and American Eagle.
Diversification Opportunities for CN MODERN and American Eagle
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 07M and American is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of CN MODERN i.e., CN MODERN and American Eagle go up and down completely randomly.
Pair Corralation between CN MODERN and American Eagle
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the American Eagle. In addition to that, CN MODERN is 2.85 times more volatile than American Eagle Outfitters. It trades about -0.11 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.06 per unit of volatility. If you would invest 1,617 in American Eagle Outfitters on October 14, 2024 and sell it today you would lose (37.00) from holding American Eagle Outfitters or give up 2.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. American Eagle Outfitters
Performance |
| Timeline |
| CN MODERN DAIRY |
| American Eagle Outfitters |
CN MODERN and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and American Eagle
The main advantage of trading using opposite CN MODERN and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, American Eagle 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 Eagle will offset losses from the drop in American Eagle's long position.| CN MODERN vs. Platinum Investment Management | CN MODERN vs. Waste Management | CN MODERN vs. Ares Management Corp | CN MODERN vs. Heidelberg Materials AG |
| American Eagle vs. CN MODERN DAIRY | American Eagle vs. Ebro Foods SA | American Eagle vs. FAST RETAIL ADR | American Eagle vs. PLANT VEDA FOODS |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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