Correlation Between American Eagle and OPKO HEALTH
Can any of the company-specific risk be diversified away by investing in both American Eagle and OPKO 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 OPKO 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 OPKO HEALTH, you can compare the effects of market volatilities on American Eagle and OPKO 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 OPKO HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and OPKO HEALTH.
Diversification Opportunities for American Eagle and OPKO HEALTH
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and OPKO is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and OPKO HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPKO HEALTH 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 OPKO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPKO HEALTH has no effect on the direction of American Eagle i.e., American Eagle and OPKO HEALTH go up and down completely randomly.
Pair Corralation between American Eagle and OPKO HEALTH
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the OPKO HEALTH. In addition to that, American Eagle is 4.39 times more volatile than OPKO HEALTH. It trades about -0.04 of its total potential returns per unit of risk. OPKO HEALTH is currently generating about -0.18 per unit of volatility. If you would invest 151.00 in OPKO HEALTH on October 30, 2024 and sell it today you would lose (8.00) from holding OPKO HEALTH or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. OPKO HEALTH
Performance |
| Timeline |
| American Eagle Outfitters |
| OPKO HEALTH |
American Eagle and OPKO HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and OPKO HEALTH
The main advantage of trading using opposite American Eagle and OPKO HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, OPKO 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 OPKO HEALTH will offset losses from the drop in OPKO HEALTH's long position.| American Eagle vs. Altair Engineering | American Eagle vs. Entravision Communications | American Eagle vs. Air New Zealand | American Eagle vs. GMO Internet |
| OPKO HEALTH vs. Nucletron Electronic Aktiengesellschaft | OPKO HEALTH vs. Molson Coors Beverage | OPKO HEALTH vs. Arrow Electronics | OPKO HEALTH vs. ARROW ELECTRONICS |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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