Correlation Between GameStop Corp and American Eagle
Can any of the company-specific risk be diversified away by investing in both GameStop Corp 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 GameStop Corp and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and American Eagle Outfitters, you can compare the effects of market volatilities on GameStop Corp 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 GameStop Corp with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and American Eagle.
Diversification Opportunities for GameStop Corp and American Eagle
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GameStop and American is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp 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 GameStop Corp 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 GameStop Corp 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 GameStop Corp i.e., GameStop Corp and American Eagle go up and down completely randomly.
Pair Corralation between GameStop Corp and American Eagle
Assuming the 90 days trading horizon GameStop Corp is expected to under-perform the American Eagle. In addition to that, GameStop Corp is 1.17 times more volatile than American Eagle Outfitters. It trades about -0.32 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.14 per unit of volatility. If you would invest 1,617 in American Eagle Outfitters on November 8, 2024 and sell it today you would lose (127.00) from holding American Eagle Outfitters or give up 7.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. American Eagle Outfitters
Performance |
| Timeline |
| GameStop Corp |
| American Eagle Outfitters |
GameStop Corp and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and American Eagle
The main advantage of trading using opposite GameStop Corp and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp 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.| GameStop Corp vs. Monster Beverage Corp | GameStop Corp vs. BII Railway Transportation | GameStop Corp vs. THAI BEVERAGE | GameStop Corp vs. Fevertree Drinks PLC |
| American Eagle vs. DOCDATA | American Eagle vs. UNIVERSAL MUSIC GROUP | American Eagle vs. TYSON FOODS A | American Eagle vs. Datalogic SpA |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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