Correlation Between American Eagle and Ralph Lauren
Can any of the company-specific risk be diversified away by investing in both American Eagle and Ralph Lauren 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 Ralph Lauren 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 Ralph Lauren Corp, you can compare the effects of market volatilities on American Eagle and Ralph Lauren 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 Ralph Lauren. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Ralph Lauren.
Diversification Opportunities for American Eagle and Ralph Lauren
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Ralph is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Ralph Lauren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralph Lauren 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 Ralph Lauren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralph Lauren Corp has no effect on the direction of American Eagle i.e., American Eagle and Ralph Lauren go up and down completely randomly.
Pair Corralation between American Eagle and Ralph Lauren
Considering the 90-day investment horizon American Eagle Outfitters is expected to under-perform the Ralph Lauren. In addition to that, American Eagle is 1.06 times more volatile than Ralph Lauren Corp. It trades about -0.14 of its total potential returns per unit of risk. Ralph Lauren Corp is currently generating about 0.19 per unit of volatility. If you would invest 20,356 in Ralph Lauren Corp on August 30, 2024 and sell it today you would earn a total of 1,911 from holding Ralph Lauren Corp or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Eagle Outfitters vs. Ralph Lauren Corp
Performance |
| Timeline |
| American Eagle Outfitters |
| Ralph Lauren Corp |
American Eagle and Ralph Lauren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Ralph Lauren
The main advantage of trading using opposite American Eagle and Ralph Lauren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Ralph Lauren 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 Ralph Lauren will offset losses from the drop in Ralph Lauren's long position.| American Eagle vs. Urban Outfitters | American Eagle vs. Foot Locker | American Eagle vs. Childrens Place | American Eagle vs. Abercrombie Fitch |
| Ralph Lauren vs. VF Corporation | Ralph Lauren vs. Levi Strauss Co | Ralph Lauren vs. Under Armour A | Ralph Lauren vs. Columbia Sportswear |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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