Correlation Between American Eagle and National Health
Can any of the company-specific risk be diversified away by investing in both American Eagle and National Health 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 National Health 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 National Health Investors, you can compare the effects of market volatilities on American Eagle and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and National Health.
Diversification Opportunities for American Eagle and National Health
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and National is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of American Eagle i.e., American Eagle and National Health go up and down completely randomly.
Pair Corralation between American Eagle and National Health
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the National Health. In addition to that, American Eagle is 1.57 times more volatile than National Health Investors. It trades about -0.08 of its total potential returns per unit of risk. National Health Investors is currently generating about -0.06 per unit of volatility. If you would invest 7,000 in National Health Investors on October 1, 2024 and sell it today you would lose (400.00) from holding National Health Investors or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. National Health Investors
Performance |
| Timeline |
| American Eagle Outfitters |
| National Health Investors |
American Eagle and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and National Health
The main advantage of trading using opposite American Eagle and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.| American Eagle vs. Selective Insurance Group | American Eagle vs. QBE Insurance Group | American Eagle vs. Siamgas And Petrochemicals | American Eagle vs. Lamar Advertising |
| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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