Correlation Between American Eagle and Industria
Can any of the company-specific risk be diversified away by investing in both American Eagle and Industria 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 Industria 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 Industria de Diseno, you can compare the effects of market volatilities on American Eagle and Industria 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 Industria. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Industria.
Diversification Opportunities for American Eagle and Industria
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Industria is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Industria de Diseno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseno 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 Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseno has no effect on the direction of American Eagle i.e., American Eagle and Industria go up and down completely randomly.
Pair Corralation between American Eagle and Industria
Assuming the 90 days horizon American Eagle Outfitters is expected to under-perform the Industria. In addition to that, American Eagle is 1.68 times more volatile than Industria de Diseno. It trades about -0.05 of its total potential returns per unit of risk. Industria de Diseno is currently generating about 0.07 per unit of volatility. If you would invest 4,797 in Industria de Diseno on November 2, 2024 and sell it today you would earn a total of 453.00 from holding Industria de Diseno or generate 9.44% 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. Industria de Diseno
Performance |
Timeline |
American Eagle Outfitters |
Industria de Diseno |
American Eagle and Industria Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Eagle and Industria
The main advantage of trading using opposite American Eagle and Industria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Industria 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 Industria will offset losses from the drop in Industria's long position.American Eagle vs. Magic Software Enterprises | American Eagle vs. OPERA SOFTWARE | American Eagle vs. ASURE SOFTWARE | American Eagle vs. Moneysupermarket Group PLC |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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