Correlation Between Superior Plus and American Eagle
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and American Eagle Outfitters, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and American Eagle.
Diversification Opportunities for Superior Plus and American Eagle
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Superior and American is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp 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 Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and American Eagle go up and down completely randomly.
Pair Corralation between Superior Plus and American Eagle
Assuming the 90 days horizon Superior Plus Corp is expected to generate 0.73 times more return on investment than American Eagle. However, Superior Plus Corp is 1.36 times less risky than American Eagle. It trades about -0.16 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.43 per unit of risk. If you would invest 414.00 in Superior Plus Corp on November 27, 2024 and sell it today you would lose (22.00) from holding Superior Plus Corp or give up 5.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. American Eagle Outfitters
Performance |
| Timeline |
| Superior Plus Corp |
| American Eagle Outfitters |
Superior Plus and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and American Eagle
The main advantage of trading using opposite Superior Plus and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. SANOK RUBBER ZY | Superior Plus vs. APPLIED MATERIALS | Superior Plus vs. WILLIS LEASE FIN | Superior Plus vs. FUYO GENERAL LEASE |
| American Eagle vs. Gaming and Leisure | American Eagle vs. PLAYWAY SA ZY 10 | American Eagle vs. BJs Restaurants | American Eagle vs. Air Transport Services |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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