Correlation Between American Eagle and Lipocine
Can any of the company-specific risk be diversified away by investing in both American Eagle and Lipocine 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 Lipocine 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 Lipocine, you can compare the effects of market volatilities on American Eagle and Lipocine 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 Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Lipocine.
Diversification Opportunities for American Eagle and Lipocine
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Lipocine is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of American Eagle i.e., American Eagle and Lipocine go up and down completely randomly.
Pair Corralation between American Eagle and Lipocine
Considering the 90-day investment horizon American Eagle Outfitters is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, American Eagle Outfitters is 1.08 times less risky than Lipocine. The stock trades about -0.01 of its potential returns per unit of risk. The Lipocine is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 510.00 in Lipocine on September 13, 2024 and sell it today you would earn a total of 21.00 from holding Lipocine or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Lipocine
Performance |
| Timeline |
| American Eagle Outfitters |
| Lipocine |
American Eagle and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Lipocine
The main advantage of trading using opposite American Eagle and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Lipocine 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 Lipocine will offset losses from the drop in Lipocine's long position.| American Eagle vs. Capri Holdings | American Eagle vs. Movado Group | American Eagle vs. Tapestry | American Eagle vs. Brilliant Earth Group |
| Lipocine vs. Emergent Biosolutions | Lipocine vs. Bausch Health Companies | Lipocine vs. Neurocrine Biosciences | Lipocine vs. Teva Pharma Industries |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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