Correlation Between American Eagle and Talanx AG
Can any of the company-specific risk be diversified away by investing in both American Eagle and Talanx AG 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 Talanx AG 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 Talanx AG, you can compare the effects of market volatilities on American Eagle and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Talanx AG.
Diversification Opportunities for American Eagle and Talanx AG
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Talanx is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of American Eagle i.e., American Eagle and Talanx AG go up and down completely randomly.
Pair Corralation between American Eagle and Talanx AG
Assuming the 90 days horizon American Eagle Outfitters is expected to under-perform the Talanx AG. In addition to that, American Eagle is 1.8 times more volatile than Talanx AG. It trades about -0.07 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.43 per unit of volatility. If you would invest 7,080 in Talanx AG on September 1, 2024 and sell it today you would earn a total of 885.00 from holding Talanx AG or generate 12.5% 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. Talanx AG
Performance |
| Timeline |
| American Eagle Outfitters |
| Talanx AG |
American Eagle and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Talanx AG
The main advantage of trading using opposite American Eagle and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG's long position.| American Eagle vs. Superior Plus Corp | American Eagle vs. Origin Agritech | American Eagle vs. Identiv | American Eagle vs. INTUITIVE SURGICAL |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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