Correlation Between American Eagle and InterContinental
Can any of the company-specific risk be diversified away by investing in both American Eagle and InterContinental 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 InterContinental 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 InterContinental Hotels Group, you can compare the effects of market volatilities on American Eagle and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and InterContinental.
Diversification Opportunities for American Eagle and InterContinental
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and InterContinental is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of American Eagle i.e., American Eagle and InterContinental go up and down completely randomly.
Pair Corralation between American Eagle and InterContinental
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the InterContinental. In addition to that, American Eagle is 1.11 times more volatile than InterContinental Hotels Group. It trades about -0.11 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.34 per unit of volatility. If you would invest 10,300 in InterContinental Hotels Group on August 30, 2024 and sell it today you would earn a total of 1,500 from holding InterContinental Hotels Group or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. InterContinental Hotels Group
Performance |
| Timeline |
| American Eagle Outfitters |
| InterContinental Hotels |
American Eagle and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and InterContinental
The main advantage of trading using opposite American Eagle and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| American Eagle vs. PARKEN Sport Entertainment | American Eagle vs. Scandinavian Tobacco Group | American Eagle vs. JD SPORTS FASH | American Eagle vs. TOWNSQUARE MEDIA INC |
| InterContinental vs. AECOM TECHNOLOGY | InterContinental vs. Amkor Technology | InterContinental vs. QBE Insurance Group | InterContinental vs. Align Technology |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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