Correlation Between FARM 51 and American Eagle
Can any of the company-specific risk be diversified away by investing in both FARM 51 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 FARM 51 and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and American Eagle Outfitters, you can compare the effects of market volatilities on FARM 51 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 FARM 51 with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and American Eagle.
Diversification Opportunities for FARM 51 and American Eagle
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FARM and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP 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 FARM 51 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 FARM 51 GROUP 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 FARM 51 i.e., FARM 51 and American Eagle go up and down completely randomly.
Pair Corralation between FARM 51 and American Eagle
Assuming the 90 days horizon FARM 51 GROUP is expected to generate 0.81 times more return on investment than American Eagle. However, FARM 51 GROUP is 1.24 times less risky than American Eagle. It trades about 0.0 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 300.00 in FARM 51 GROUP on October 11, 2024 and sell it today you would lose (3.00) from holding FARM 51 GROUP or give up 1.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
FARM 51 GROUP vs. American Eagle Outfitters
Performance |
| Timeline |
| FARM 51 GROUP |
| American Eagle Outfitters |
FARM 51 and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and American Eagle
The main advantage of trading using opposite FARM 51 and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 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.| FARM 51 vs. PKSHA TECHNOLOGY INC | FARM 51 vs. Warner Music Group | FARM 51 vs. BJs Restaurants | FARM 51 vs. ETFS Coffee ETC |
| American Eagle vs. Scottish Mortgage Investment | American Eagle vs. Shenzhen Investment Limited | American Eagle vs. DELTA AIR LINES | American Eagle vs. FIRST SAVINGS FINL |
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 Stocks Directory module to find actively traded stocks across global markets.
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