Correlation Between LEGACY IRON and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both LEGACY IRON and AM 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 LEGACY IRON and AM EAGLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGACY IRON ORE and AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on LEGACY IRON and AM 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 LEGACY IRON with a short position of AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGACY IRON and AM EAGLE.
Diversification Opportunities for LEGACY IRON and AM EAGLE
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LEGACY and AFG is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LEGACY IRON ORE and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS and LEGACY IRON 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 LEGACY IRON ORE are associated (or correlated) with AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of LEGACY IRON i.e., LEGACY IRON and AM EAGLE go up and down completely randomly.
Pair Corralation between LEGACY IRON and AM EAGLE
Assuming the 90 days trading horizon LEGACY IRON ORE is expected to under-perform the AM EAGLE. But the stock apears to be less risky and, when comparing its historical volatility, LEGACY IRON ORE is 5.66 times less risky than AM EAGLE. The stock trades about -0.06 of its potential returns per unit of risk. The AM EAGLE OUTFITTERS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,397 in AM EAGLE OUTFITTERS on September 3, 2024 and sell it today you would earn a total of 413.00 from holding AM EAGLE OUTFITTERS or generate 29.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
LEGACY IRON ORE vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| LEGACY IRON ORE |
| AM EAGLE OUTFITTERS |
LEGACY IRON and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEGACY IRON and AM EAGLE
The main advantage of trading using opposite LEGACY IRON and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGACY IRON position performs unexpectedly, AM 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| LEGACY IRON vs. TOTAL GABON | LEGACY IRON vs. Walgreens Boots Alliance | LEGACY IRON vs. Peak Resources Limited |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| CEOs Directory Screen CEOs from public companies around the world | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |