Correlation Between BII Railway and American Eagle
Can any of the company-specific risk be diversified away by investing in both BII Railway 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 BII Railway and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and American Eagle Outfitters, you can compare the effects of market volatilities on BII Railway 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 BII Railway with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and American Eagle.
Diversification Opportunities for BII Railway and American Eagle
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BII and American is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and American Eagle go up and down completely randomly.
Pair Corralation between BII Railway and American Eagle
Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the American Eagle. But the stock apears to be less risky and, when comparing its historical volatility, BII Railway Transportation is 1.5 times less risky than American Eagle. The stock trades about -0.09 of its potential returns per unit of risk. The American Eagle Outfitters is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,760 in American Eagle Outfitters on September 4, 2024 and sell it today you would earn a total of 140.00 from holding American Eagle Outfitters or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BII Railway Transportation vs. American Eagle Outfitters
Performance |
| Timeline |
| BII Railway Transpor |
| American Eagle Outfitters |
BII Railway and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and American Eagle
The main advantage of trading using opposite BII Railway and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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.| BII Railway vs. FUJITSU LTD ADR | BII Railway vs. Superior Plus Corp | BII Railway vs. NMI Holdings | BII Railway vs. Origin Agritech |
| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |