Correlation Between UNIVMUSIC GRPADR050 and American Eagle
Can any of the company-specific risk be diversified away by investing in both UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNIVMUSIC GRPADR050 and American Eagle Outfitters, you can compare the effects of market volatilities on UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVMUSIC GRPADR050 and American Eagle.
Diversification Opportunities for UNIVMUSIC GRPADR050 and American Eagle
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UNIVMUSIC and American is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 i.e., UNIVMUSIC GRPADR050 and American Eagle go up and down completely randomly.
Pair Corralation between UNIVMUSIC GRPADR050 and American Eagle
Assuming the 90 days trading horizon UNIVMUSIC GRPADR050 is expected to generate 1.59 times less return on investment than American Eagle. But when comparing it to its historical volatility, UNIVMUSIC GRPADR050 is 1.55 times less risky than American Eagle. It trades about 0.02 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,460 in American Eagle Outfitters on October 25, 2024 and sell it today you would earn a total of 190.00 from holding American Eagle Outfitters or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
UNIVMUSIC GRPADR050 vs. American Eagle Outfitters
Performance |
| Timeline |
| UNIVMUSIC GRPADR050 |
| American Eagle Outfitters |
UNIVMUSIC GRPADR050 and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVMUSIC GRPADR050 and American Eagle
The main advantage of trading using opposite UNIVMUSIC GRPADR050 and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVMUSIC GRPADR050 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.| UNIVMUSIC GRPADR050 vs. Charter Communications | UNIVMUSIC GRPADR050 vs. Warner Music Group | UNIVMUSIC GRPADR050 vs. Superior Plus Corp | UNIVMUSIC GRPADR050 vs. Origin Agritech |
| American Eagle vs. FAST RETAIL ADR | American Eagle vs. TRADEDOUBLER AB SK | American Eagle vs. SALESFORCE INC CDR | American Eagle vs. TRADEGATE |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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