Correlation Between American Eagle and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both American Eagle and PARKEN Sport 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 PARKEN Sport 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 PARKEN Sport Entertainment, you can compare the effects of market volatilities on American Eagle and PARKEN Sport 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 PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and PARKEN Sport.
Diversification Opportunities for American Eagle and PARKEN Sport
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and PARKEN is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta 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 PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of American Eagle i.e., American Eagle and PARKEN Sport go up and down completely randomly.
Pair Corralation between American Eagle and PARKEN Sport
Assuming the 90 days trading horizon American Eagle is expected to generate 2.13 times less return on investment than PARKEN Sport. But when comparing it to its historical volatility, American Eagle Outfitters is 2.61 times less risky than PARKEN Sport. It trades about 0.07 of its potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 563.00 in PARKEN Sport Entertainment on September 4, 2024 and sell it today you would earn a total of 1,032 from holding PARKEN Sport Entertainment or generate 183.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
American Eagle Outfitters vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| American Eagle Outfitters |
| PARKEN Sport Enterta |
American Eagle and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and PARKEN Sport
The main advantage of trading using opposite American Eagle and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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