Correlation Between American Eagle and COVIVIO HOTELS
Can any of the company-specific risk be diversified away by investing in both American Eagle and COVIVIO HOTELS 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 COVIVIO HOTELS 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 COVIVIO HOTELS INH, you can compare the effects of market volatilities on American Eagle and COVIVIO HOTELS 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 COVIVIO HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and COVIVIO HOTELS.
Diversification Opportunities for American Eagle and COVIVIO HOTELS
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and COVIVIO is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and COVIVIO HOTELS INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COVIVIO HOTELS INH 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 COVIVIO HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COVIVIO HOTELS INH has no effect on the direction of American Eagle i.e., American Eagle and COVIVIO HOTELS go up and down completely randomly.
Pair Corralation between American Eagle and COVIVIO HOTELS
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 2.07 times more return on investment than COVIVIO HOTELS. However, American Eagle is 2.07 times more volatile than COVIVIO HOTELS INH. It trades about 0.03 of its potential returns per unit of risk. COVIVIO HOTELS INH is currently generating about 0.06 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. COVIVIO HOTELS INH
Performance |
| Timeline |
| American Eagle Outfitters |
| COVIVIO HOTELS INH |
American Eagle and COVIVIO HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and COVIVIO HOTELS
The main advantage of trading using opposite American Eagle and COVIVIO HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, COVIVIO HOTELS 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 COVIVIO HOTELS will offset losses from the drop in COVIVIO HOTELS's long position.| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
| COVIVIO HOTELS vs. Singapore Telecommunications Limited | COVIVIO HOTELS vs. Charter Communications | COVIVIO HOTELS vs. VIVA WINE GROUP | COVIVIO HOTELS vs. Bumrungrad Hospital Public |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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