Correlation Between AM EAGLE and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on AM EAGLE and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Iridium Communications.
Diversification Opportunities for AM EAGLE and Iridium Communications
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AFG and Iridium is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of AM EAGLE i.e., AM EAGLE and Iridium Communications go up and down completely randomly.
Pair Corralation between AM EAGLE and Iridium Communications
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to generate 0.97 times more return on investment than Iridium Communications. However, AM EAGLE OUTFITTERS is 1.03 times less risky than Iridium Communications. It trades about 0.07 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.06 per unit of risk. If you would invest 1,051 in AM EAGLE OUTFITTERS on August 31, 2024 and sell it today you would earn a total of 759.00 from holding AM EAGLE OUTFITTERS or generate 72.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. Iridium Communications
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| Iridium Communications |
AM EAGLE and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and Iridium Communications
The main advantage of trading using opposite AM EAGLE and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| AM EAGLE vs. Gaztransport Technigaz SA | AM EAGLE vs. Zoom Video Communications | AM EAGLE vs. BII Railway Transportation | AM EAGLE vs. Warner Music Group |
| Iridium Communications vs. ATT Inc | Iridium Communications vs. Deutsche Telekom AG | Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. NMI Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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