Correlation Between American Eagle and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both American Eagle and WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments, you can compare the effects of market volatilities on American Eagle and WisdomTree Investments 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 WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and WisdomTree Investments.
Diversification Opportunities for American Eagle and WisdomTree Investments
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and WisdomTree is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments 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 WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of American Eagle i.e., American Eagle and WisdomTree Investments go up and down completely randomly.
Pair Corralation between American Eagle and WisdomTree Investments
Assuming the 90 days trading horizon American Eagle is expected to generate 315.31 times less return on investment than WisdomTree Investments. In addition to that, American Eagle is 1.07 times more volatile than WisdomTree Investments. It trades about 0.0 of its total potential returns per unit of risk. WisdomTree Investments is currently generating about 0.15 per unit of volatility. If you would invest 842.00 in WisdomTree Investments on September 12, 2024 and sell it today you would earn a total of 226.00 from holding WisdomTree Investments or generate 26.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
American Eagle Outfitters vs. WisdomTree Investments
Performance |
| Timeline |
| American Eagle Outfitters |
| WisdomTree Investments |
American Eagle and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and WisdomTree Investments
The main advantage of trading using opposite American Eagle and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, WisdomTree Investments 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 WisdomTree Investments will offset losses from the drop in WisdomTree Investments' long position.| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
| WisdomTree Investments vs. Ameriprise Financial | WisdomTree Investments vs. Ares Management Corp | WisdomTree Investments vs. Superior Plus Corp | WisdomTree Investments vs. SIVERS SEMICONDUCTORS AB |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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