Correlation Between American Eagle and ARDAGH METAL
Can any of the company-specific risk be diversified away by investing in both American Eagle and ARDAGH METAL 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 ARDAGH METAL 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 ARDAGH METAL PACDL 0001, you can compare the effects of market volatilities on American Eagle and ARDAGH METAL 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 ARDAGH METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and ARDAGH METAL.
Diversification Opportunities for American Eagle and ARDAGH METAL
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and ARDAGH is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and ARDAGH METAL PACDL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARDAGH METAL PACDL 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 ARDAGH METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARDAGH METAL PACDL has no effect on the direction of American Eagle i.e., American Eagle and ARDAGH METAL go up and down completely randomly.
Pair Corralation between American Eagle and ARDAGH METAL
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 0.63 times more return on investment than ARDAGH METAL. However, American Eagle Outfitters is 1.58 times less risky than ARDAGH METAL. It trades about -0.09 of its potential returns per unit of risk. ARDAGH METAL PACDL 0001 is currently generating about -0.11 per unit of risk. If you would invest 1,657 in American Eagle Outfitters on November 6, 2024 and sell it today you would lose (87.00) from holding American Eagle Outfitters or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. ARDAGH METAL PACDL 0001
Performance |
| Timeline |
| American Eagle Outfitters |
| ARDAGH METAL PACDL |
American Eagle and ARDAGH METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and ARDAGH METAL
The main advantage of trading using opposite American Eagle and ARDAGH METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, ARDAGH METAL 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 ARDAGH METAL will offset losses from the drop in ARDAGH METAL's long position.| American Eagle vs. COSMOSTEEL HLDGS | American Eagle vs. British American Tobacco | American Eagle vs. Tencent Music Entertainment | American Eagle vs. Daido Steel Co |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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