Correlation Between American Eagle and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both American Eagle and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on American Eagle and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and COLUMBIA SPORTSWEAR.
Diversification Opportunities for American Eagle and COLUMBIA SPORTSWEAR
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and COLUMBIA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of American Eagle i.e., American Eagle and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between American Eagle and COLUMBIA SPORTSWEAR
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 2.01 times more return on investment than COLUMBIA SPORTSWEAR. However, American Eagle is 2.01 times more volatile than COLUMBIA SPORTSWEAR. It trades about 0.02 of its potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.01 per unit of risk. If you would invest 1,460 in American Eagle Outfitters on October 25, 2024 and sell it today you would earn a total of 190.00 from holding American Eagle Outfitters or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| American Eagle Outfitters |
| COLUMBIA SPORTSWEAR |
American Eagle and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite American Eagle and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR will offset losses from the drop in COLUMBIA SPORTSWEAR's long position.| American Eagle vs. FAST RETAIL ADR | American Eagle vs. TRADEDOUBLER AB SK | American Eagle vs. SALESFORCE INC CDR | American Eagle vs. TRADEGATE |
| COLUMBIA SPORTSWEAR vs. LPKF Laser Electronics | COLUMBIA SPORTSWEAR vs. GWILLI FOOD | COLUMBIA SPORTSWEAR vs. EBRO FOODS | COLUMBIA SPORTSWEAR vs. Richardson Electronics |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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