Correlation Between American Eagle and URW (STAPLSHS
Can any of the company-specific risk be diversified away by investing in both American Eagle and URW (STAPLSHS 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 URW (STAPLSHS 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 URW EO 05, you can compare the effects of market volatilities on American Eagle and URW (STAPLSHS 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 URW (STAPLSHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and URW (STAPLSHS.
Diversification Opportunities for American Eagle and URW (STAPLSHS
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and URW is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and URW EO 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URW (STAPLSHS 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 URW (STAPLSHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URW (STAPLSHS has no effect on the direction of American Eagle i.e., American Eagle and URW (STAPLSHS go up and down completely randomly.
Pair Corralation between American Eagle and URW (STAPLSHS
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 0.79 times more return on investment than URW (STAPLSHS. However, American Eagle Outfitters is 1.26 times less risky than URW (STAPLSHS. It trades about 0.03 of its potential returns per unit of risk. URW EO 05 is currently generating about -0.09 per unit of risk. If you would invest 1,650 in American Eagle Outfitters on October 7, 2024 and sell it today you would earn a total of 10.00 from holding American Eagle Outfitters or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. URW EO 05
Performance |
| Timeline |
| American Eagle Outfitters |
| URW (STAPLSHS |
American Eagle and URW (STAPLSHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and URW (STAPLSHS
The main advantage of trading using opposite American Eagle and URW (STAPLSHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, URW (STAPLSHS 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 URW (STAPLSHS will offset losses from the drop in URW (STAPLSHS's long position.| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
| URW (STAPLSHS vs. Elmos Semiconductor SE | URW (STAPLSHS vs. Magnachip Semiconductor | URW (STAPLSHS vs. STRAYER EDUCATION | URW (STAPLSHS vs. EIDESVIK OFFSHORE NK |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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