Correlation Between American Eagle and Buckle
Can any of the company-specific risk be diversified away by investing in both American Eagle and Buckle 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 American Eagle and Buckle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Outfitters and Buckle Inc, you can compare the effects of market volatilities on American Eagle and Buckle 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 American Eagle with a short position of Buckle. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Buckle.
Diversification Opportunities for American Eagle and Buckle
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Buckle is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Buckle Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckle Inc and American Eagle 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 American Eagle Outfitters are associated (or correlated) with Buckle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckle Inc has no effect on the direction of American Eagle i.e., American Eagle and Buckle go up and down completely randomly.
Pair Corralation between American Eagle and Buckle
Considering the 90-day investment horizon American Eagle Outfitters is expected to under-perform the Buckle. In addition to that, American Eagle is 1.68 times more volatile than Buckle Inc. It trades about -0.17 of its total potential returns per unit of risk. Buckle Inc is currently generating about -0.12 per unit of volatility. If you would invest 4,139 in Buckle Inc on December 24, 2024 and sell it today you would lose (234.00) from holding Buckle Inc or give up 5.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Buckle Inc
Performance |
| Timeline |
| American Eagle Outfitters |
| Buckle Inc |
American Eagle and Buckle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Buckle
The main advantage of trading using opposite American Eagle and Buckle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Buckle 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 Buckle will offset losses from the drop in Buckle's long position.| American Eagle vs. Urban Outfitters | American Eagle vs. Foot Locker | American Eagle vs. Childrens Place | American Eagle vs. Abercrombie Fitch |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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