Correlation Between American Eagle and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both American Eagle and Hochschild Mining 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 Hochschild Mining 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 Hochschild Mining plc, you can compare the effects of market volatilities on American Eagle and Hochschild Mining 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 Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Hochschild Mining.
Diversification Opportunities for American Eagle and Hochschild Mining
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Hochschild is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Hochschild Mining plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochschild Mining 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 Hochschild Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochschild Mining plc has no effect on the direction of American Eagle i.e., American Eagle and Hochschild Mining go up and down completely randomly.
Pair Corralation between American Eagle and Hochschild Mining
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 1.27 times more return on investment than Hochschild Mining. However, American Eagle is 1.27 times more volatile than Hochschild Mining plc. It trades about 0.01 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.0 per unit of risk. If you would invest 1,690 in American Eagle Outfitters on September 12, 2024 and sell it today you would lose (10.00) from holding American Eagle Outfitters or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Eagle Outfitters vs. Hochschild Mining plc
Performance |
| Timeline |
| American Eagle Outfitters |
| Hochschild Mining plc |
American Eagle and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Hochschild Mining
The main advantage of trading using opposite American Eagle and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Hochschild Mining 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 Hochschild Mining will offset losses from the drop in Hochschild Mining's long position.| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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