Correlation Between 2G ENERGY and American Eagle
Can any of the company-specific risk be diversified away by investing in both 2G ENERGY 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 2G ENERGY and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2G ENERGY and American Eagle Outfitters, you can compare the effects of market volatilities on 2G ENERGY 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 2G ENERGY with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2G ENERGY and American Eagle.
Diversification Opportunities for 2G ENERGY and American Eagle
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 2GB and American is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding 2G ENERGY 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 2G ENERGY 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 2G ENERGY 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 2G ENERGY i.e., 2G ENERGY and American Eagle go up and down completely randomly.
Pair Corralation between 2G ENERGY and American Eagle
Assuming the 90 days trading horizon 2G ENERGY is expected to generate 1.21 times more return on investment than American Eagle. However, 2G ENERGY is 1.21 times more volatile than American Eagle Outfitters. It trades about 0.01 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.07 per unit of risk. If you would invest 2,195 in 2G ENERGY on September 1, 2024 and sell it today you would earn a total of 0.00 from holding 2G ENERGY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
2G ENERGY vs. American Eagle Outfitters
Performance |
| Timeline |
| 2G ENERGY |
| American Eagle Outfitters |
2G ENERGY and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2G ENERGY and American Eagle
The main advantage of trading using opposite 2G ENERGY and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2G ENERGY 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.| 2G ENERGY vs. Australian Agricultural | 2G ENERGY vs. Ultra Clean Holdings | 2G ENERGY vs. Charter Communications | 2G ENERGY vs. Consolidated Communications Holdings |
| American Eagle vs. Superior Plus Corp | American Eagle vs. Origin Agritech | American Eagle vs. Identiv | American Eagle vs. INTUITIVE SURGICAL |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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