Correlation Between AM EAGLE and RELO GROUP
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and RELO 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 AM EAGLE and RELO GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AM EAGLE OUTFITTERS and RELO GROUP INC, you can compare the effects of market volatilities on AM EAGLE and RELO 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 AM EAGLE with a short position of RELO GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and RELO GROUP.
Diversification Opportunities for AM EAGLE and RELO GROUP
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AFG and RELO is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and RELO GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELO GROUP INC and AM 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 AM EAGLE OUTFITTERS are associated (or correlated) with RELO GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELO GROUP INC has no effect on the direction of AM EAGLE i.e., AM EAGLE and RELO GROUP go up and down completely randomly.
Pair Corralation between AM EAGLE and RELO GROUP
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to under-perform the RELO GROUP. In addition to that, AM EAGLE is 1.15 times more volatile than RELO GROUP INC. It trades about -0.11 of its total potential returns per unit of risk. RELO GROUP INC is currently generating about 0.01 per unit of volatility. If you would invest 1,090 in RELO GROUP INC on August 29, 2024 and sell it today you would earn a total of 0.00 from holding RELO GROUP INC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. RELO GROUP INC
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| RELO GROUP INC |
AM EAGLE and RELO GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and RELO GROUP
The main advantage of trading using opposite AM EAGLE and RELO GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, RELO 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 RELO GROUP will offset losses from the drop in RELO GROUP's long position.The idea behind AM EAGLE OUTFITTERS and RELO GROUP INC 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.| RELO GROUP vs. Spirent Communications plc | RELO GROUP vs. Scandinavian Tobacco Group | RELO GROUP vs. SHELF DRILLING LTD | RELO GROUP vs. AM EAGLE OUTFITTERS |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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