Correlation Between American Eagle and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both American Eagle and AM EAGLE 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 AM EAGLE 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 AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on American Eagle and AM EAGLE 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 AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and AM EAGLE.
Diversification Opportunities for American Eagle and AM EAGLE
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and AFG is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS 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 AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of American Eagle i.e., American Eagle and AM EAGLE go up and down completely randomly.
Pair Corralation between American Eagle and AM EAGLE
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the AM EAGLE. But the stock apears to be less risky and, when comparing its historical volatility, American Eagle Outfitters is 1.42 times less risky than AM EAGLE. The stock trades about -0.06 of its potential returns per unit of risk. The AM EAGLE OUTFITTERS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,820 in AM EAGLE OUTFITTERS on September 1, 2024 and sell it today you would lose (10.00) from holding AM EAGLE OUTFITTERS or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| American Eagle Outfitters |
| AM EAGLE OUTFITTERS |
American Eagle and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and AM EAGLE
The main advantage of trading using opposite American Eagle and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, AM EAGLE 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| American Eagle vs. LPKF Laser Electronics | American Eagle vs. AOI Electronics Co | American Eagle vs. CITY OFFICE REIT | American Eagle vs. ARROW ELECTRONICS |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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