Correlation Between MSCI and American Eagle
Can any of the company-specific risk be diversified away by investing in both MSCI 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 MSCI and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSCI Inc and American Eagle Outfitters, you can compare the effects of market volatilities on MSCI 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 MSCI with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI and American Eagle.
Diversification Opportunities for MSCI and American Eagle
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between MSCI and American is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding MSCI Inc 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 MSCI 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 MSCI Inc 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 MSCI i.e., MSCI and American Eagle go up and down completely randomly.
Pair Corralation between MSCI and American Eagle
Assuming the 90 days trading horizon MSCI is expected to generate 1.36 times less return on investment than American Eagle. But when comparing it to its historical volatility, MSCI Inc is 1.61 times less risky than American Eagle. It trades about 0.03 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,415 in American Eagle Outfitters on September 3, 2024 and sell it today you would earn a total of 335.00 from holding American Eagle Outfitters or generate 23.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSCI Inc vs. American Eagle Outfitters
Performance |
| Timeline |
| MSCI Inc |
| American Eagle Outfitters |
MSCI and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSCI and American Eagle
The main advantage of trading using opposite MSCI and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSCI 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.| MSCI vs. Bausch Health Companies | MSCI vs. APPLIED MATERIALS | MSCI vs. Compagnie Plastic Omnium | MSCI vs. HEALTHCARE REAL A |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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