Correlation Between USWE SPORTS and American Eagle
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS 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 USWE SPORTS and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and American Eagle Outfitters, you can compare the effects of market volatilities on USWE SPORTS 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 USWE SPORTS with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and American Eagle.
Diversification Opportunities for USWE SPORTS and American Eagle
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between USWE and American is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB 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 USWE SPORTS 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 USWE SPORTS AB 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 USWE SPORTS i.e., USWE SPORTS and American Eagle go up and down completely randomly.
Pair Corralation between USWE SPORTS and American Eagle
Assuming the 90 days horizon USWE SPORTS AB is expected to generate 1.38 times more return on investment than American Eagle. However, USWE SPORTS is 1.38 times more volatile than American Eagle Outfitters. It trades about 0.25 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.04 per unit of risk. If you would invest 66.00 in USWE SPORTS AB on September 2, 2024 and sell it today you would earn a total of 10.00 from holding USWE SPORTS AB or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. American Eagle Outfitters
Performance |
| Timeline |
| USWE SPORTS AB |
| American Eagle Outfitters |
USWE SPORTS and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and American Eagle
The main advantage of trading using opposite USWE SPORTS and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS 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.| USWE SPORTS vs. Li Ning Company | USWE SPORTS vs. Trip Group Limited | USWE SPORTS vs. Superior Plus Corp | USWE SPORTS vs. NMI Holdings |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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