Correlation Between American Eagle and Naas Technology
Can any of the company-specific risk be diversified away by investing in both American Eagle and Naas Technology 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 Naas Technology 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 Naas Technology ADR, you can compare the effects of market volatilities on American Eagle and Naas Technology 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 Naas Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Naas Technology.
Diversification Opportunities for American Eagle and Naas Technology
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Naas is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Naas Technology ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naas Technology ADR 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 Naas Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naas Technology ADR has no effect on the direction of American Eagle i.e., American Eagle and Naas Technology go up and down completely randomly.
Pair Corralation between American Eagle and Naas Technology
Considering the 90-day investment horizon American Eagle Outfitters is expected to generate 0.27 times more return on investment than Naas Technology. However, American Eagle Outfitters is 3.66 times less risky than Naas Technology. It trades about 0.03 of its potential returns per unit of risk. Naas Technology ADR is currently generating about -0.03 per unit of risk. If you would invest 1,479 in American Eagle Outfitters on September 3, 2024 and sell it today you would earn a total of 445.00 from holding American Eagle Outfitters or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Naas Technology ADR
Performance |
| Timeline |
| American Eagle Outfitters |
| Naas Technology ADR |
American Eagle and Naas Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Naas Technology
The main advantage of trading using opposite American Eagle and Naas Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Naas Technology 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 Naas Technology will offset losses from the drop in Naas Technology's long position.| American Eagle vs. Ross Stores | American Eagle vs. Childrens Place | American Eagle vs. Buckle Inc | American Eagle vs. Guess Inc |
| Naas Technology vs. Leslies | Naas Technology vs. Sally Beauty Holdings | Naas Technology vs. ODP Corp | Naas Technology vs. 1 800 FLOWERSCOM |
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.
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