Correlation Between American Eagle and PVH Corp
Can any of the company-specific risk be diversified away by investing in both American Eagle and PVH Corp 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 PVH Corp 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 PVH Corp, you can compare the effects of market volatilities on American Eagle and PVH Corp 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 PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and PVH Corp.
Diversification Opportunities for American Eagle and PVH Corp
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and PVH is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of American Eagle i.e., American Eagle and PVH Corp go up and down completely randomly.
Pair Corralation between American Eagle and PVH Corp
Considering the 90-day investment horizon American Eagle is expected to generate 7.11 times less return on investment than PVH Corp. In addition to that, American Eagle is 1.27 times more volatile than PVH Corp. It trades about 0.02 of its total potential returns per unit of risk. PVH Corp is currently generating about 0.2 per unit of volatility. If you would invest 10,034 in PVH Corp on September 3, 2024 and sell it today you would earn a total of 803.00 from holding PVH Corp or generate 8.0% 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. PVH Corp
Performance |
| Timeline |
| American Eagle Outfitters |
| PVH Corp |
American Eagle and PVH Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and PVH Corp
The main advantage of trading using opposite American Eagle and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, PVH Corp 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 PVH Corp will offset losses from the drop in PVH Corp's long position.| American Eagle vs. Ross Stores | American Eagle vs. Childrens Place | American Eagle vs. Buckle Inc | American Eagle vs. Guess Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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