Correlation Between AM EAGLE and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and Reliance Steel 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 Reliance Steel 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 Reliance Steel Aluminum, you can compare the effects of market volatilities on AM EAGLE and Reliance Steel 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 Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Reliance Steel.
Diversification Opportunities for AM EAGLE and Reliance Steel
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFG and Reliance is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum 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 Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of AM EAGLE i.e., AM EAGLE and Reliance Steel go up and down completely randomly.
Pair Corralation between AM EAGLE and Reliance Steel
Assuming the 90 days trading horizon AM EAGLE is expected to generate 57.5 times less return on investment than Reliance Steel. In addition to that, AM EAGLE is 1.03 times more volatile than Reliance Steel Aluminum. It trades about 0.0 of its total potential returns per unit of risk. Reliance Steel Aluminum is currently generating about 0.25 per unit of volatility. If you would invest 26,491 in Reliance Steel Aluminum on September 1, 2024 and sell it today you would earn a total of 3,989 from holding Reliance Steel Aluminum or generate 15.06% 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. Reliance Steel Aluminum
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| Reliance Steel Aluminum |
AM EAGLE and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and Reliance Steel
The main advantage of trading using opposite AM EAGLE and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| AM EAGLE vs. AVITA Medical | AM EAGLE vs. EAT WELL INVESTMENT | AM EAGLE vs. Diamyd Medical AB | AM EAGLE vs. CompuGroup Medical 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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