Correlation Between DEVRY EDUCATION and American Eagle
Can any of the company-specific risk be diversified away by investing in both DEVRY EDUCATION 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 DEVRY EDUCATION and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DEVRY EDUCATION GRP and American Eagle Outfitters, you can compare the effects of market volatilities on DEVRY EDUCATION 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 DEVRY EDUCATION with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEVRY EDUCATION and American Eagle.
Diversification Opportunities for DEVRY EDUCATION and American Eagle
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DEVRY and American is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding DEVRY EDUCATION GRP 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 DEVRY EDUCATION 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 DEVRY EDUCATION GRP 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 DEVRY EDUCATION i.e., DEVRY EDUCATION and American Eagle go up and down completely randomly.
Pair Corralation between DEVRY EDUCATION and American Eagle
Assuming the 90 days trading horizon DEVRY EDUCATION GRP is expected to generate 0.78 times more return on investment than American Eagle. However, DEVRY EDUCATION GRP is 1.28 times less risky than American Eagle. It trades about 0.2 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.08 per unit of risk. If you would invest 8,900 in DEVRY EDUCATION GRP on November 1, 2024 and sell it today you would earn a total of 600.00 from holding DEVRY EDUCATION GRP or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
DEVRY EDUCATION GRP vs. American Eagle Outfitters
Performance |
| Timeline |
| DEVRY EDUCATION GRP |
| American Eagle Outfitters |
DEVRY EDUCATION and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DEVRY EDUCATION and American Eagle
The main advantage of trading using opposite DEVRY EDUCATION and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DEVRY EDUCATION 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.| DEVRY EDUCATION vs. AGF Management Limited | DEVRY EDUCATION vs. Moneysupermarket Group PLC | DEVRY EDUCATION vs. PREMIER FOODS | DEVRY EDUCATION vs. Tyson Foods |
| American Eagle vs. DICKER DATA LTD | American Eagle vs. DATAGROUP SE | American Eagle vs. PLAYWAY SA ZY 10 | American Eagle vs. Columbia Sportswear |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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