Correlation Between American Eagle and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both American Eagle and SEALED AIR 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 SEALED AIR 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 SEALED AIR , you can compare the effects of market volatilities on American Eagle and SEALED AIR 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 SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and SEALED AIR.
Diversification Opportunities for American Eagle and SEALED AIR
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and SEALED is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR 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 SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of American Eagle i.e., American Eagle and SEALED AIR go up and down completely randomly.
Pair Corralation between American Eagle and SEALED AIR
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the SEALED AIR. In addition to that, American Eagle is 1.12 times more volatile than SEALED AIR . It trades about -0.06 of its total potential returns per unit of risk. SEALED AIR is currently generating about 0.07 per unit of volatility. If you would invest 3,340 in SEALED AIR on September 1, 2024 and sell it today you would earn a total of 80.00 from holding SEALED AIR or generate 2.4% 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. SEALED AIR
Performance |
| Timeline |
| American Eagle Outfitters |
| SEALED AIR |
American Eagle and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and SEALED AIR
The main advantage of trading using opposite American Eagle and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, SEALED AIR 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 SEALED AIR will offset losses from the drop in SEALED AIR'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 |
| SEALED AIR vs. SIVERS SEMICONDUCTORS AB | SEALED AIR vs. Darden Restaurants | SEALED AIR vs. Reliance Steel Aluminum | SEALED AIR vs. Q2M Managementberatung AG |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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