Correlation Between American Eagle and Urban Outfitters
Can any of the company-specific risk be diversified away by investing in both American Eagle and Urban Outfitters 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 Urban Outfitters 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 Urban Outfitters, you can compare the effects of market volatilities on American Eagle and Urban Outfitters 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 Urban Outfitters. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Urban Outfitters.
Diversification Opportunities for American Eagle and Urban Outfitters
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Urban is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Urban Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Outfitters 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 Urban Outfitters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Outfitters has no effect on the direction of American Eagle i.e., American Eagle and Urban Outfitters go up and down completely randomly.
Pair Corralation between American Eagle and Urban Outfitters
Assuming the 90 days horizon American Eagle Outfitters is expected to under-perform the Urban Outfitters. But the stock apears to be less risky and, when comparing its historical volatility, American Eagle Outfitters is 1.13 times less risky than Urban Outfitters. The stock trades about -0.15 of its potential returns per unit of risk. The Urban Outfitters is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 5,300 in Urban Outfitters on November 28, 2024 and sell it today you would lose (300.00) from holding Urban Outfitters or give up 5.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
American Eagle Outfitters vs. Urban Outfitters
Performance |
| Timeline |
| American Eagle Outfitters |
| Urban Outfitters |
American Eagle and Urban Outfitters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Urban Outfitters
The main advantage of trading using opposite American Eagle and Urban Outfitters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Urban Outfitters 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 Urban Outfitters will offset losses from the drop in Urban Outfitters' long position.| American Eagle vs. Ares Management Corp | American Eagle vs. Brockhaus Capital Management | American Eagle vs. CeoTronics AG | American Eagle vs. Jupiter Fund Management |
| Urban Outfitters vs. Corsair Gaming | Urban Outfitters vs. Ryanair Holdings plc | Urban Outfitters vs. Alfa Financial Software | Urban Outfitters vs. Beta Systems Software |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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