Correlation Between American Eagle and G III
Can any of the company-specific risk be diversified away by investing in both American Eagle and G III 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 G III 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 G III Apparel Group, you can compare the effects of market volatilities on American Eagle and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and G III.
Diversification Opportunities for American Eagle and G III
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and GI4 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of American Eagle i.e., American Eagle and G III go up and down completely randomly.
Pair Corralation between American Eagle and G III
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the G III. In addition to that, American Eagle is 1.65 times more volatile than G III Apparel Group. It trades about -0.08 of its total potential returns per unit of risk. G III Apparel Group is currently generating about 0.03 per unit of volatility. If you would invest 3,120 in G III Apparel Group on November 3, 2024 and sell it today you would earn a total of 20.00 from holding G III Apparel Group or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Eagle Outfitters vs. G III Apparel Group
Performance |
| Timeline |
| American Eagle Outfitters |
| G III Apparel |
American Eagle and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and G III
The main advantage of trading using opposite American Eagle and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| American Eagle vs. GALENA MINING LTD | American Eagle vs. ARDAGH METAL PACDL 0001 | American Eagle vs. SLR Investment Corp | American Eagle vs. MAGNUM MINING EXP |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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