Correlation Between AM EAGLE and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and Fast Retailing 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 Fast Retailing 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 Fast Retailing Co, you can compare the effects of market volatilities on AM EAGLE and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Fast Retailing.
Diversification Opportunities for AM EAGLE and Fast Retailing
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between AFG and Fast is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of AM EAGLE i.e., AM EAGLE and Fast Retailing go up and down completely randomly.
Pair Corralation between AM EAGLE and Fast Retailing
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to generate 0.92 times more return on investment than Fast Retailing. However, AM EAGLE OUTFITTERS is 1.08 times less risky than Fast Retailing. It trades about -0.11 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.22 per unit of risk. If you would invest 1,627 in AM EAGLE OUTFITTERS on October 14, 2024 and sell it today you would lose (77.00) from holding AM EAGLE OUTFITTERS or give up 4.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. Fast Retailing Co
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| Fast Retailing |
AM EAGLE and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and Fast Retailing
The main advantage of trading using opposite AM EAGLE and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| AM EAGLE vs. Ryanair Holdings plc | AM EAGLE vs. UNIVERSAL MUSIC GROUP | AM EAGLE vs. DELTA AIR LINES | AM EAGLE vs. SEALED AIR |
| Fast Retailing vs. AWILCO DRILLING PLC | Fast Retailing vs. Pembina Pipeline Corp | Fast Retailing vs. RYU Apparel | Fast Retailing vs. AM EAGLE OUTFITTERS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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