Correlation Between WisdomTree Investments and American Eagle
Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments 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 WisdomTree Investments and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Investments and American Eagle Outfitters, you can compare the effects of market volatilities on WisdomTree Investments 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 WisdomTree Investments with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and American Eagle.
Diversification Opportunities for WisdomTree Investments and American Eagle
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and American is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments i.e., WisdomTree Investments and American Eagle go up and down completely randomly.
Pair Corralation between WisdomTree Investments and American Eagle
Assuming the 90 days horizon WisdomTree Investments is expected to generate 0.94 times more return on investment than American Eagle. However, WisdomTree Investments is 1.07 times less risky than American Eagle. It trades about 0.15 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 842.00 in WisdomTree Investments on September 12, 2024 and sell it today you would earn a total of 226.00 from holding WisdomTree Investments or generate 26.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
WisdomTree Investments vs. American Eagle Outfitters
Performance |
| Timeline |
| WisdomTree Investments |
| American Eagle Outfitters |
WisdomTree Investments and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Investments and American Eagle
The main advantage of trading using opposite WisdomTree Investments and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments 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.| WisdomTree Investments vs. Ameriprise Financial | WisdomTree Investments vs. Ares Management Corp | WisdomTree Investments vs. Superior Plus Corp | WisdomTree Investments vs. SIVERS SEMICONDUCTORS AB |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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