Correlation Between American Outdoor and Escalade Incorporated
Can any of the company-specific risk be diversified away by investing in both American Outdoor and Escalade Incorporated 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 Outdoor and Escalade Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Outdoor Brands and Escalade Incorporated, you can compare the effects of market volatilities on American Outdoor and Escalade Incorporated 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 Outdoor with a short position of Escalade Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Outdoor and Escalade Incorporated.
Diversification Opportunities for American Outdoor and Escalade Incorporated
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Escalade is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding American Outdoor Brands and Escalade Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escalade Incorporated and American Outdoor 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 Outdoor Brands are associated (or correlated) with Escalade Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escalade Incorporated has no effect on the direction of American Outdoor i.e., American Outdoor and Escalade Incorporated go up and down completely randomly.
Pair Corralation between American Outdoor and Escalade Incorporated
Given the investment horizon of 90 days American Outdoor is expected to generate 3.37 times less return on investment than Escalade Incorporated. But when comparing it to its historical volatility, American Outdoor Brands is 1.16 times less risky than Escalade Incorporated. It trades about 0.06 of its potential returns per unit of risk. Escalade Incorporated is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,392 in Escalade Incorporated on August 28, 2024 and sell it today you would earn a total of 164.00 from holding Escalade Incorporated or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Outdoor Brands vs. Escalade Incorporated
Performance |
| Timeline |
| American Outdoor Brands |
| Escalade Incorporated |
American Outdoor and Escalade Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Outdoor and Escalade Incorporated
The main advantage of trading using opposite American Outdoor and Escalade Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Outdoor position performs unexpectedly, Escalade Incorporated 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 Escalade Incorporated will offset losses from the drop in Escalade Incorporated's long position.| American Outdoor vs. Clarus Corp | American Outdoor vs. Escalade Incorporated | American Outdoor vs. Johnson Outdoors | American Outdoor vs. JAKKS Pacific |
| Escalade Incorporated vs. Johnson Outdoors | Escalade Incorporated vs. First Business Financial | Escalade Incorporated vs. Flexsteel Industries | Escalade Incorporated vs. Superior Uniform Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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