Correlation Between American Eagle and GB Group
Can any of the company-specific risk be diversified away by investing in both American Eagle and GB Group 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 GB Group 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 GB Group plc, you can compare the effects of market volatilities on American Eagle and GB Group 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 GB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and GB Group.
Diversification Opportunities for American Eagle and GB Group
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and 0GB is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and GB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GB Group plc 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 GB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GB Group plc has no effect on the direction of American Eagle i.e., American Eagle and GB Group go up and down completely randomly.
Pair Corralation between American Eagle and GB Group
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 1.55 times more return on investment than GB Group. However, American Eagle is 1.55 times more volatile than GB Group plc. It trades about -0.06 of its potential returns per unit of risk. GB Group plc is currently generating about -0.15 per unit of risk. If you would invest 1,667 in American Eagle Outfitters on November 5, 2024 and sell it today you would lose (97.00) from holding American Eagle Outfitters or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. GB Group plc
Performance |
| Timeline |
| American Eagle Outfitters |
| GB Group plc |
American Eagle and GB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and GB Group
The main advantage of trading using opposite American Eagle and GB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, GB Group 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 GB Group will offset losses from the drop in GB Group's long position.| American Eagle vs. CARSALESCOM | American Eagle vs. Geely Automobile Holdings | American Eagle vs. East Africa Metals | American Eagle vs. De Grey Mining |
| GB Group vs. Intuit Inc | GB Group vs. Palo Alto Networks | GB Group vs. Synopsys | GB Group vs. Cadence Design Systems |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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