Correlation Between CAIRN HOMES and American Eagle
Can any of the company-specific risk be diversified away by investing in both CAIRN HOMES and American Eagle 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 CAIRN HOMES and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAIRN HOMES EO and American Eagle Outfitters, you can compare the effects of market volatilities on CAIRN HOMES and American Eagle 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 CAIRN HOMES with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIRN HOMES and American Eagle.
Diversification Opportunities for CAIRN HOMES and American Eagle
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CAIRN and American is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and American Eagle go up and down completely randomly.
Pair Corralation between CAIRN HOMES and American Eagle
Assuming the 90 days horizon CAIRN HOMES EO is expected to under-perform the American Eagle. In addition to that, CAIRN HOMES is 1.11 times more volatile than American Eagle Outfitters. It trades about -0.27 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.05 per unit of volatility. If you would invest 1,587 in American Eagle Outfitters on October 23, 2024 and sell it today you would lose (37.00) from holding American Eagle Outfitters or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAIRN HOMES EO vs. American Eagle Outfitters
Performance |
| Timeline |
| CAIRN HOMES EO |
| American Eagle Outfitters |
CAIRN HOMES and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAIRN HOMES and American Eagle
The main advantage of trading using opposite CAIRN HOMES and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIRN HOMES position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| CAIRN HOMES vs. Tower One Wireless | CAIRN HOMES vs. FIH MOBILE | CAIRN HOMES vs. INTERSHOP Communications Aktiengesellschaft | CAIRN HOMES vs. MCEWEN MINING INC |
| American Eagle vs. Haier Smart Home | American Eagle vs. Beazer Homes USA | American Eagle vs. CAIRN HOMES EO | American Eagle vs. Fair Isaac Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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