Correlation Between Gladstone Investment and American Eagle
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment 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 Gladstone Investment and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and American Eagle Outfitters, you can compare the effects of market volatilities on Gladstone Investment 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 Gladstone Investment with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and American Eagle.
Diversification Opportunities for Gladstone Investment and American Eagle
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gladstone and American is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and American Eagle go up and down completely randomly.
Pair Corralation between Gladstone Investment and American Eagle
Assuming the 90 days horizon Gladstone Investment is expected to generate 0.71 times more return on investment than American Eagle. However, Gladstone Investment is 1.42 times less risky than American Eagle. It trades about 0.17 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.0 per unit of risk. If you would invest 1,050 in Gladstone Investment on September 12, 2024 and sell it today you would earn a total of 246.00 from holding Gladstone Investment or generate 23.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Gladstone Investment vs. American Eagle Outfitters
Performance |
| Timeline |
| Gladstone Investment |
| American Eagle Outfitters |
Gladstone Investment and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and American Eagle
The main advantage of trading using opposite Gladstone Investment and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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.| Gladstone Investment vs. Lyxor 1 | Gladstone Investment vs. Xtrackers ShortDAX | Gladstone Investment vs. Xtrackers LevDAX |
| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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