Correlation Between AM EAGLE and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both AM EAGLE and Woolworths Group 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 Woolworths Group 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 Woolworths Group Limited, you can compare the effects of market volatilities on AM EAGLE and Woolworths Group 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 Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Woolworths Group.
Diversification Opportunities for AM EAGLE and Woolworths Group
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AFG and Woolworths is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths 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 Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of AM EAGLE i.e., AM EAGLE and Woolworths Group go up and down completely randomly.
Pair Corralation between AM EAGLE and Woolworths Group
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to generate 3.25 times more return on investment than Woolworths Group. However, AM EAGLE is 3.25 times more volatile than Woolworths Group Limited. It trades about 0.06 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about 0.13 per unit of risk. If you would invest 1,760 in AM EAGLE OUTFITTERS on September 3, 2024 and sell it today you would earn a total of 50.00 from holding AM EAGLE OUTFITTERS or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. Woolworths Group Limited
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| Woolworths Group |
AM EAGLE and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and Woolworths Group
The main advantage of trading using opposite AM EAGLE and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, Woolworths Group 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 Woolworths Group will offset losses from the drop in Woolworths Group's long position.The idea behind AM EAGLE OUTFITTERS and Woolworths Group Limited 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.| Woolworths Group vs. Automatic Data Processing | Woolworths Group vs. Datang International Power | Woolworths Group vs. UNITED UTILITIES GR | Woolworths Group vs. COMMERCIAL VEHICLE |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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