Correlation Between AM EAGLE and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and PARKEN Sport 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 PARKEN Sport 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 PARKEN Sport Entertainment, you can compare the effects of market volatilities on AM EAGLE and PARKEN Sport 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 PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and PARKEN Sport.
Diversification Opportunities for AM EAGLE and PARKEN Sport
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFG and PARKEN is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta 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 PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of AM EAGLE i.e., AM EAGLE and PARKEN Sport go up and down completely randomly.
Pair Corralation between AM EAGLE and PARKEN Sport
Assuming the 90 days trading horizon AM EAGLE is expected to generate 2.48 times less return on investment than PARKEN Sport. In addition to that, AM EAGLE is 1.89 times more volatile than PARKEN Sport Entertainment. It trades about 0.01 of its total potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.06 per unit of volatility. If you would invest 1,640 in PARKEN Sport Entertainment on September 13, 2024 and sell it today you would earn a total of 40.00 from holding PARKEN Sport Entertainment or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| PARKEN Sport Enterta |
AM EAGLE and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and PARKEN Sport
The main advantage of trading using opposite AM EAGLE and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.The idea behind AM EAGLE OUTFITTERS and PARKEN Sport Entertainment 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.| PARKEN Sport vs. Science Applications International | PARKEN Sport vs. DATAGROUP SE | PARKEN Sport vs. Pure Storage | PARKEN Sport vs. Elmos Semiconductor SE |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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