Correlation Between AM EAGLE and RETAIL FOOD
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and RETAIL FOOD 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 RETAIL FOOD 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 RETAIL FOOD GROUP, you can compare the effects of market volatilities on AM EAGLE and RETAIL FOOD 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 RETAIL FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and RETAIL FOOD.
Diversification Opportunities for AM EAGLE and RETAIL FOOD
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AFG and RETAIL is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and RETAIL FOOD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RETAIL FOOD GROUP 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 RETAIL FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RETAIL FOOD GROUP has no effect on the direction of AM EAGLE i.e., AM EAGLE and RETAIL FOOD go up and down completely randomly.
Pair Corralation between AM EAGLE and RETAIL FOOD
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to under-perform the RETAIL FOOD. But the stock apears to be less risky and, when comparing its historical volatility, AM EAGLE OUTFITTERS is 1.08 times less risky than RETAIL FOOD. The stock trades about -0.02 of its potential returns per unit of risk. The RETAIL FOOD GROUP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.65 in RETAIL FOOD GROUP on August 31, 2024 and sell it today you would earn a total of 0.55 from holding RETAIL FOOD GROUP or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. RETAIL FOOD GROUP
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| RETAIL FOOD GROUP |
AM EAGLE and RETAIL FOOD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and RETAIL FOOD
The main advantage of trading using opposite AM EAGLE and RETAIL FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, RETAIL FOOD 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 RETAIL FOOD will offset losses from the drop in RETAIL FOOD's long position.| AM EAGLE vs. Gaztransport Technigaz SA | AM EAGLE vs. Zoom Video Communications | AM EAGLE vs. BII Railway Transportation | AM EAGLE vs. Warner Music Group |
| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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