Correlation Between American Eagle and Suntory Beverage
Can any of the company-specific risk be diversified away by investing in both American Eagle and Suntory Beverage 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 Suntory Beverage 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 Suntory Beverage Food, you can compare the effects of market volatilities on American Eagle and Suntory Beverage 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 Suntory Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Suntory Beverage.
Diversification Opportunities for American Eagle and Suntory Beverage
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Suntory is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food 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 Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of American Eagle i.e., American Eagle and Suntory Beverage go up and down completely randomly.
Pair Corralation between American Eagle and Suntory Beverage
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 1.34 times more return on investment than Suntory Beverage. However, American Eagle is 1.34 times more volatile than Suntory Beverage Food. It trades about -0.08 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about -0.13 per unit of risk. If you would invest 1,568 in American Eagle Outfitters on October 20, 2024 and sell it today you would lose (58.00) from holding American Eagle Outfitters or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
American Eagle Outfitters vs. Suntory Beverage Food
Performance |
| Timeline |
| American Eagle Outfitters |
| Suntory Beverage Food |
American Eagle and Suntory Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Suntory Beverage
The main advantage of trading using opposite American Eagle and Suntory Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Suntory Beverage 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 Suntory Beverage will offset losses from the drop in Suntory Beverage's long position.| American Eagle vs. Darden Restaurants | American Eagle vs. MCEWEN MINING INC | American Eagle vs. De Grey Mining | American Eagle vs. Lamar Advertising |
| Suntory Beverage vs. Pembina Pipeline Corp | Suntory Beverage vs. PRECISION DRILLING P | Suntory Beverage vs. Urban Outfitters | Suntory Beverage vs. American Eagle Outfitters |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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