Correlation Between Industria and American Eagle
Can any of the company-specific risk be diversified away by investing in both Industria 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 Industria and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industria de Diseno and American Eagle Outfitters, you can compare the effects of market volatilities on Industria 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 Industria with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and American Eagle.
Diversification Opportunities for Industria and American Eagle
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Industria and American is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno 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 Industria 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 Industria de Diseno 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 Industria i.e., Industria and American Eagle go up and down completely randomly.
Pair Corralation between Industria and American Eagle
Assuming the 90 days horizon Industria de Diseno is expected to generate 0.52 times more return on investment than American Eagle. However, Industria de Diseno is 1.92 times less risky than American Eagle. It trades about -0.11 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.12 per unit of risk. If you would invest 2,845 in Industria de Diseno on August 31, 2024 and sell it today you would lose (89.00) from holding Industria de Diseno or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industria de Diseno vs. American Eagle Outfitters
Performance |
| Timeline |
| Industria de Diseno |
| American Eagle Outfitters |
Industria and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industria and American Eagle
The main advantage of trading using opposite Industria and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria 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.| Industria vs. Aritzia | Industria vs. Boot Barn Holdings | Industria vs. Guess Inc | Industria vs. The TJX Companies |
| American Eagle vs. Urban Outfitters | American Eagle vs. Foot Locker | American Eagle vs. Childrens Place | American Eagle vs. Abercrombie Fitch |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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