Correlation Between American Eagle and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both American Eagle and BORR DRILLING 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 BORR DRILLING 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 BORR DRILLING NEW, you can compare the effects of market volatilities on American Eagle and BORR DRILLING 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 BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and BORR DRILLING.
Diversification Opportunities for American Eagle and BORR DRILLING
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and BORR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of American Eagle i.e., American Eagle and BORR DRILLING go up and down completely randomly.
Pair Corralation between American Eagle and BORR DRILLING
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 0.9 times more return on investment than BORR DRILLING. However, American Eagle Outfitters is 1.11 times less risky than BORR DRILLING. It trades about 0.02 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about -0.05 per unit of risk. If you would invest 1,110 in American Eagle Outfitters on December 8, 2024 and sell it today you would earn a total of 50.00 from holding American Eagle Outfitters or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. BORR DRILLING NEW
Performance |
| Timeline |
| American Eagle Outfitters |
| BORR DRILLING NEW |
American Eagle and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and BORR DRILLING
The main advantage of trading using opposite American Eagle and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.| American Eagle vs. DATADOT TECHNOLOGY | American Eagle vs. DATANG INTL POW | American Eagle vs. CN DATANG C | American Eagle vs. Mobilezone Holding AG |
| BORR DRILLING vs. PennantPark Investment | BORR DRILLING vs. DAIRY FARM INTL | BORR DRILLING vs. China Railway Construction | BORR DRILLING vs. ECHO INVESTMENT ZY |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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