Correlation Between American Eagle and Global Ship
Can any of the company-specific risk be diversified away by investing in both American Eagle and Global Ship 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 Global Ship 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 Global Ship Lease, you can compare the effects of market volatilities on American Eagle and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Global Ship.
Diversification Opportunities for American Eagle and Global Ship
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Global is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of American Eagle i.e., American Eagle and Global Ship go up and down completely randomly.
Pair Corralation between American Eagle and Global Ship
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 1.64 times more return on investment than Global Ship. However, American Eagle is 1.64 times more volatile than Global Ship Lease. It trades about 0.03 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 per unit of risk. If you would invest 1,272 in American Eagle Outfitters on September 12, 2024 and sell it today you would earn a total of 428.00 from holding American Eagle Outfitters or generate 33.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Global Ship Lease
Performance |
| Timeline |
| American Eagle Outfitters |
| Global Ship Lease |
American Eagle and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Global Ship
The main advantage of trading using opposite American Eagle and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
| Global Ship vs. Superior Plus Corp | Global Ship vs. SIVERS SEMICONDUCTORS AB | Global Ship vs. CHINA HUARONG ENERHD 50 | Global Ship vs. NORDIC HALIBUT AS |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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