Correlation Between PLAYMATES TOYS and American Eagle
Can any of the company-specific risk be diversified away by investing in both PLAYMATES TOYS 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 PLAYMATES TOYS and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYMATES TOYS and American Eagle Outfitters, you can compare the effects of market volatilities on PLAYMATES TOYS 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 PLAYMATES TOYS with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and American Eagle.
Diversification Opportunities for PLAYMATES TOYS and American Eagle
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PLAYMATES and American is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS 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 PLAYMATES TOYS 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 PLAYMATES TOYS 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 PLAYMATES TOYS i.e., PLAYMATES TOYS and American Eagle go up and down completely randomly.
Pair Corralation between PLAYMATES TOYS and American Eagle
Assuming the 90 days trading horizon PLAYMATES TOYS is expected to generate 2.1 times more return on investment than American Eagle. However, PLAYMATES TOYS is 2.1 times more volatile than American Eagle Outfitters. It trades about 0.08 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.02 per unit of risk. If you would invest 1.36 in PLAYMATES TOYS on October 26, 2024 and sell it today you would earn a total of 5.14 from holding PLAYMATES TOYS or generate 377.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYMATES TOYS vs. American Eagle Outfitters
Performance |
| Timeline |
| PLAYMATES TOYS |
| American Eagle Outfitters |
PLAYMATES TOYS and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYMATES TOYS and American Eagle
The main advantage of trading using opposite PLAYMATES TOYS and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYMATES TOYS 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.| PLAYMATES TOYS vs. Erste Group Bank | PLAYMATES TOYS vs. Sun Life Financial | PLAYMATES TOYS vs. Discover Financial Services | PLAYMATES TOYS vs. SLIGRO FOOD GROUP |
| American Eagle vs. Tyson Foods | American Eagle vs. PLANT VEDA FOODS | American Eagle vs. Monument Mining Limited | American Eagle vs. Zijin Mining Group |
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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