Correlation Between Gamma Communications and American Eagle
Can any of the company-specific risk be diversified away by investing in both Gamma Communications 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 Gamma Communications and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications plc and American Eagle Outfitters, you can compare the effects of market volatilities on Gamma Communications 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 Gamma Communications with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and American Eagle.
Diversification Opportunities for Gamma Communications and American Eagle
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gamma and American is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc 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 Gamma Communications 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 Gamma Communications plc 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 Gamma Communications i.e., Gamma Communications and American Eagle go up and down completely randomly.
Pair Corralation between Gamma Communications and American Eagle
Assuming the 90 days horizon Gamma Communications plc is expected to generate 0.96 times more return on investment than American Eagle. However, Gamma Communications plc is 1.04 times less risky than American Eagle. It trades about 0.1 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.01 per unit of risk. If you would invest 1,168 in Gamma Communications plc on September 4, 2024 and sell it today you would earn a total of 782.00 from holding Gamma Communications plc or generate 66.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. American Eagle Outfitters
Performance |
| Timeline |
| Gamma Communications plc |
| American Eagle Outfitters |
Gamma Communications and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and American Eagle
The main advantage of trading using opposite Gamma Communications and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications 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.| Gamma Communications vs. T Mobile | Gamma Communications vs. China Mobile Limited | Gamma Communications vs. ATT Inc | Gamma Communications vs. Nippon Telegraph and |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |