Correlation Between American Eagle and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both American Eagle and Bunzl Plc 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 Bunzl Plc 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 Bunzl plc, you can compare the effects of market volatilities on American Eagle and Bunzl Plc 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 Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Bunzl Plc.
Diversification Opportunities for American Eagle and Bunzl Plc
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Bunzl is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc 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 Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of American Eagle i.e., American Eagle and Bunzl Plc go up and down completely randomly.
Pair Corralation between American Eagle and Bunzl Plc
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 2.38 times more return on investment than Bunzl Plc. However, American Eagle is 2.38 times more volatile than Bunzl plc. It trades about 0.1 of its potential returns per unit of risk. Bunzl plc is currently generating about 0.11 per unit of risk. If you would invest 1,568 in American Eagle Outfitters on October 25, 2024 and sell it today you would earn a total of 62.00 from holding American Eagle Outfitters or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Bunzl plc
Performance |
| Timeline |
| American Eagle Outfitters |
| Bunzl plc |
American Eagle and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Bunzl Plc
The main advantage of trading using opposite American Eagle and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Bunzl Plc 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| American Eagle vs. Beta Systems Software | American Eagle vs. APPLIED MATERIALS | American Eagle vs. Summit Materials | American Eagle vs. CyberArk Software |
| Bunzl Plc vs. KINGBOARD CHEMICAL | Bunzl Plc vs. CDL INVESTMENT | Bunzl Plc vs. PDS Biotechnology Corp | Bunzl Plc vs. Mitsui Chemicals |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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