Correlation Between Accent Resources and American Eagle

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Can any of the company-specific risk be diversified away by investing in both Accent Resources 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 Accent Resources and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accent Resources NL and American Eagle Outfitters, you can compare the effects of market volatilities on Accent Resources 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 Accent Resources with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accent Resources and American Eagle.

Diversification Opportunities for Accent Resources and American Eagle

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Accent and American is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Accent Resources NL 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 Accent Resources 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 Accent Resources NL 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 Accent Resources i.e., Accent Resources and American Eagle go up and down completely randomly.

Pair Corralation between Accent Resources and American Eagle

Assuming the 90 days horizon Accent Resources NL is expected to generate 3.27 times more return on investment than American Eagle. However, Accent Resources is 3.27 times more volatile than American Eagle Outfitters. It trades about 0.2 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.06 per unit of risk. If you would invest  1.10  in Accent Resources NL on September 6, 2024 and sell it today you would earn a total of  0.65  from holding Accent Resources NL or generate 59.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Accent Resources NL  vs.  American Eagle Outfitters

 Performance 
       Timeline  
Accent Resources 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Accent Resources NL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Accent Resources reported solid returns over the last few months and may actually be approaching a breakup point.
American Eagle Outfitters 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in American Eagle Outfitters are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, American Eagle unveiled solid returns over the last few months and may actually be approaching a breakup point.

Accent Resources and American Eagle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Accent Resources and American Eagle

The main advantage of trading using opposite Accent Resources and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accent Resources 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.
The idea behind Accent Resources NL and American Eagle Outfitters pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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