Correlation Between AM EAGLE and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS, you can compare the effects of market volatilities on AM EAGLE and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and VULCAN MATERIALS.
Diversification Opportunities for AM EAGLE and VULCAN MATERIALS
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFG and VULCAN is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of AM EAGLE i.e., AM EAGLE and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between AM EAGLE and VULCAN MATERIALS
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to under-perform the VULCAN MATERIALS. In addition to that, AM EAGLE is 1.46 times more volatile than VULCAN MATERIALS. It trades about -0.07 of its total potential returns per unit of risk. VULCAN MATERIALS is currently generating about 0.16 per unit of volatility. If you would invest 22,558 in VULCAN MATERIALS on September 13, 2024 and sell it today you would earn a total of 3,442 from holding VULCAN MATERIALS or generate 15.26% 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. VULCAN MATERIALS
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| VULCAN MATERIALS |
AM EAGLE and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and VULCAN MATERIALS
The main advantage of trading using opposite AM EAGLE and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.The idea behind AM EAGLE OUTFITTERS and VULCAN MATERIALS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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