Correlation Between American Eagle and Dalata Hotel
Can any of the company-specific risk be diversified away by investing in both American Eagle and Dalata Hotel 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 Dalata Hotel 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 Dalata Hotel Group, you can compare the effects of market volatilities on American Eagle and Dalata Hotel 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 Dalata Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Dalata Hotel.
Diversification Opportunities for American Eagle and Dalata Hotel
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Dalata is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group 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 Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of American Eagle i.e., American Eagle and Dalata Hotel go up and down completely randomly.
Pair Corralation between American Eagle and Dalata Hotel
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 1.48 times more return on investment than Dalata Hotel. However, American Eagle is 1.48 times more volatile than Dalata Hotel Group. It trades about 0.02 of its potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.03 per unit of risk. If you would invest 1,417 in American Eagle Outfitters on October 30, 2024 and sell it today you would earn a total of 193.00 from holding American Eagle Outfitters or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Dalata Hotel Group
Performance |
| Timeline |
| American Eagle Outfitters |
| Dalata Hotel Group |
American Eagle and Dalata Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Dalata Hotel
The main advantage of trading using opposite American Eagle and Dalata Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Dalata Hotel 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 Dalata Hotel will offset losses from the drop in Dalata Hotel's long position.| American Eagle vs. REVO INSURANCE SPA | American Eagle vs. Reinsurance Group of | American Eagle vs. Japan Post Insurance | American Eagle vs. Goosehead Insurance |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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