Correlation Between American Eagle and Chegg
Can any of the company-specific risk be diversified away by investing in both American Eagle and Chegg 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 Chegg 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 Chegg Inc, you can compare the effects of market volatilities on American Eagle and Chegg 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 Chegg. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Chegg.
Diversification Opportunities for American Eagle and Chegg
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Chegg is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc 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 Chegg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chegg Inc has no effect on the direction of American Eagle i.e., American Eagle and Chegg go up and down completely randomly.
Pair Corralation between American Eagle and Chegg
Assuming the 90 days trading horizon American Eagle is expected to generate 32.97 times less return on investment than Chegg. But when comparing it to its historical volatility, American Eagle Outfitters is 1.89 times less risky than Chegg. It trades about 0.01 of its potential returns per unit of risk. Chegg Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 173.00 in Chegg Inc on September 13, 2024 and sell it today you would earn a total of 77.00 from holding Chegg Inc or generate 44.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Chegg Inc
Performance |
| Timeline |
| American Eagle Outfitters |
| Chegg Inc |
American Eagle and Chegg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Chegg
The main advantage of trading using opposite American Eagle and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Chegg 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 Chegg will offset losses from the drop in Chegg's long position.| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
| Chegg vs. Zijin Mining Group | Chegg vs. MCEWEN MINING INC | Chegg vs. Penta Ocean Construction Co | Chegg vs. Chongqing Machinery Electric |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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