Correlation Between American Eagle and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both American Eagle and Tenaris SA 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 Tenaris SA 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 Tenaris SA ADR, you can compare the effects of market volatilities on American Eagle and Tenaris SA 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 Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Tenaris SA.
Diversification Opportunities for American Eagle and Tenaris SA
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Tenaris is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Tenaris SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA 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 Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA ADR has no effect on the direction of American Eagle i.e., American Eagle and Tenaris SA go up and down completely randomly.
Pair Corralation between American Eagle and Tenaris SA
Considering the 90-day investment horizon American Eagle Outfitters is expected to under-perform the Tenaris SA. In addition to that, American Eagle is 1.41 times more volatile than Tenaris SA ADR. It trades about -0.03 of its total potential returns per unit of risk. Tenaris SA ADR is currently generating about 0.09 per unit of volatility. If you would invest 3,182 in Tenaris SA ADR on September 1, 2024 and sell it today you would earn a total of 651.00 from holding Tenaris SA ADR or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Tenaris SA ADR
Performance |
| Timeline |
| American Eagle Outfitters |
| Tenaris SA ADR |
American Eagle and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Tenaris SA
The main advantage of trading using opposite American Eagle and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA's long position.| American Eagle vs. Capri Holdings | American Eagle vs. Movado Group | American Eagle vs. Tapestry | American Eagle vs. Brilliant Earth Group |
| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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