Correlation Between American Eagle and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both American Eagle and Federal Agricultural 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 Federal Agricultural 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 Federal Agricultural Mortgage, you can compare the effects of market volatilities on American Eagle and Federal Agricultural 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 Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Federal Agricultural.
Diversification Opportunities for American Eagle and Federal Agricultural
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Federal is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural 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 Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of American Eagle i.e., American Eagle and Federal Agricultural go up and down completely randomly.
Pair Corralation between American Eagle and Federal Agricultural
Assuming the 90 days trading horizon American Eagle is expected to generate 1.61 times less return on investment than Federal Agricultural. In addition to that, American Eagle is 1.33 times more volatile than Federal Agricultural Mortgage. It trades about 0.03 of its total potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.06 per unit of volatility. If you would invest 10,412 in Federal Agricultural Mortgage on October 11, 2024 and sell it today you would earn a total of 7,888 from holding Federal Agricultural Mortgage or generate 75.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| American Eagle Outfitters |
| Federal Agricultural |
American Eagle and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Federal Agricultural
The main advantage of trading using opposite American Eagle and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.| American Eagle vs. Scottish Mortgage Investment | American Eagle vs. Shenzhen Investment Limited | American Eagle vs. DELTA AIR LINES | American Eagle vs. FIRST SAVINGS FINL |
| Federal Agricultural vs. Aedas Homes SA | Federal Agricultural vs. American Homes 4 | Federal Agricultural vs. Addus HomeCare | Federal Agricultural vs. Haverty Furniture Companies |
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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