Correlation Between Grocery Outlet and American Eagle
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet 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 Grocery Outlet and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grocery Outlet Holding and American Eagle Outfitters, you can compare the effects of market volatilities on Grocery Outlet 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 Grocery Outlet with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and American Eagle.
Diversification Opportunities for Grocery Outlet and American Eagle
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grocery and American is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding 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 Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and American Eagle go up and down completely randomly.
Pair Corralation between Grocery Outlet and American Eagle
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 1.53 times more return on investment than American Eagle. However, Grocery Outlet is 1.53 times more volatile than American Eagle Outfitters. It trades about 0.5 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 1,430 in Grocery Outlet Holding on September 1, 2024 and sell it today you would earn a total of 670.00 from holding Grocery Outlet Holding or generate 46.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. American Eagle Outfitters
Performance |
| Timeline |
| Grocery Outlet Holding |
| American Eagle Outfitters |
Grocery Outlet and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and American Eagle
The main advantage of trading using opposite Grocery Outlet and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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.| Grocery Outlet vs. Natural Grocers by | Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Ocado Group plc |
| American Eagle vs. Capri Holdings | American Eagle vs. Movado Group | American Eagle vs. Tapestry | American Eagle vs. Brilliant Earth Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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