Correlation Between American Eagle and HF FOODS
Can any of the company-specific risk be diversified away by investing in both American Eagle and HF FOODS 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 HF FOODS 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 HF FOODS GRP, you can compare the effects of market volatilities on American Eagle and HF FOODS 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 HF FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and HF FOODS.
Diversification Opportunities for American Eagle and HF FOODS
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and 3GX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP 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 HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of American Eagle i.e., American Eagle and HF FOODS go up and down completely randomly.
Pair Corralation between American Eagle and HF FOODS
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 0.68 times more return on investment than HF FOODS. However, American Eagle Outfitters is 1.48 times less risky than HF FOODS. It trades about -0.56 of its potential returns per unit of risk. HF FOODS GRP is currently generating about -0.55 per unit of risk. If you would invest 1,590 in American Eagle Outfitters on December 1, 2024 and sell it today you would lose (340.00) from holding American Eagle Outfitters or give up 21.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Eagle Outfitters vs. HF FOODS GRP
Performance |
| Timeline |
| American Eagle Outfitters |
| HF FOODS GRP |
American Eagle and HF FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and HF FOODS
The main advantage of trading using opposite American Eagle and HF FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, HF FOODS 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 HF FOODS will offset losses from the drop in HF FOODS's long position.| American Eagle vs. Caseys General Stores | American Eagle vs. FAST RETAIL ADR | American Eagle vs. GOME Retail Holdings | American Eagle vs. COSTCO WHOLESALE CDR |
| HF FOODS vs. Sysco | HF FOODS vs. Jernimo Martins SGPS | HF FOODS vs. Bunzl plc | HF FOODS vs. JERONIMO MARTINS UNADR2 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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