Correlation Between American Eagle and SANLTD

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Can any of the company-specific risk be diversified away by investing in both American Eagle and SANLTD 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 SANLTD 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 SANLTD 28 08 MAR 27, you can compare the effects of market volatilities on American Eagle and SANLTD 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 SANLTD. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and SANLTD.

Diversification Opportunities for American Eagle and SANLTD

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between American and SANLTD is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and SANLTD 28 08 MAR 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANLTD 28 08 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 SANLTD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANLTD 28 08 has no effect on the direction of American Eagle i.e., American Eagle and SANLTD go up and down completely randomly.

Pair Corralation between American Eagle and SANLTD

Considering the 90-day investment horizon American Eagle Outfitters is expected to generate 1.12 times more return on investment than SANLTD. However, American Eagle is 1.12 times more volatile than SANLTD 28 08 MAR 27. It trades about 0.09 of its potential returns per unit of risk. SANLTD 28 08 MAR 27 is currently generating about -0.28 per unit of risk. If you would invest  1,914  in American Eagle Outfitters on September 4, 2024 and sell it today you would earn a total of  79.00  from holding American Eagle Outfitters or generate 4.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy61.9%
ValuesDaily Returns

American Eagle Outfitters  vs.  SANLTD 28 08 MAR 27

 Performance 
       Timeline  
American Eagle Outfitters 

Risk-Adjusted Performance

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Over the last 90 days American Eagle Outfitters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, American Eagle is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
SANLTD 28 08 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days SANLTD 28 08 MAR 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for SANLTD 28 08 MAR 27 investors.

American Eagle and SANLTD Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Eagle and SANLTD

The main advantage of trading using opposite American Eagle and SANLTD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, SANLTD 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 SANLTD will offset losses from the drop in SANLTD's long position.
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The idea behind American Eagle Outfitters and SANLTD 28 08 MAR 27 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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