Correlation Between Duluth Holdings and American Eagle
Can any of the company-specific risk be diversified away by investing in both Duluth Holdings 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 Duluth Holdings and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duluth Holdings and American Eagle Outfitters, you can compare the effects of market volatilities on Duluth Holdings 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 Duluth Holdings with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duluth Holdings and American Eagle.
Diversification Opportunities for Duluth Holdings and American Eagle
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Duluth and American is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Duluth Holdings 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 Duluth Holdings 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 Duluth Holdings 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 Duluth Holdings i.e., Duluth Holdings and American Eagle go up and down completely randomly.
Pair Corralation between Duluth Holdings and American Eagle
Given the investment horizon of 90 days Duluth Holdings is expected to generate 1.2 times more return on investment than American Eagle. However, Duluth Holdings is 1.2 times more volatile than American Eagle Outfitters. It trades about 0.04 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.02 per unit of risk. If you would invest 376.00 in Duluth Holdings on September 3, 2024 and sell it today you would earn a total of 7.00 from holding Duluth Holdings or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duluth Holdings vs. American Eagle Outfitters
Performance |
| Timeline |
| Duluth Holdings |
| American Eagle Outfitters |
Duluth Holdings and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duluth Holdings and American Eagle
The main advantage of trading using opposite Duluth Holdings and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duluth Holdings 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.| Duluth Holdings vs. Zumiez Inc | Duluth Holdings vs. JJill Inc | Duluth Holdings vs. Shoe Carnival | Duluth Holdings vs. Cato Corporation |
| American Eagle vs. Ross Stores | American Eagle vs. Childrens Place | American Eagle vs. Buckle Inc | American Eagle vs. Guess 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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