Correlation Between GMO Internet and American Eagle
Can any of the company-specific risk be diversified away by investing in both GMO Internet 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 GMO Internet and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and American Eagle Outfitters, you can compare the effects of market volatilities on GMO Internet 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 GMO Internet with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and American Eagle.
Diversification Opportunities for GMO Internet and American Eagle
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GMO and American is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet 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 GMO Internet 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 GMO Internet 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 GMO Internet i.e., GMO Internet and American Eagle go up and down completely randomly.
Pair Corralation between GMO Internet and American Eagle
Assuming the 90 days horizon GMO Internet is expected to generate 2.52 times more return on investment than American Eagle. However, GMO Internet is 2.52 times more volatile than American Eagle Outfitters. It trades about 0.07 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.03 per unit of risk. If you would invest 266.00 in GMO Internet on October 31, 2024 and sell it today you would earn a total of 1,414 from holding GMO Internet or generate 531.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
GMO Internet vs. American Eagle Outfitters
Performance |
| Timeline |
| GMO Internet |
| American Eagle Outfitters |
GMO Internet and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and American Eagle
The main advantage of trading using opposite GMO Internet and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet 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.| GMO Internet vs. Globex Mining Enterprises | GMO Internet vs. Keck Seng Investments | GMO Internet vs. Scottish Mortgage Investment | GMO Internet vs. Perseus Mining Limited |
| American Eagle vs. DEVRY EDUCATION GRP | American Eagle vs. Thai Beverage Public | American Eagle vs. SAN MIGUEL BREWERY | American Eagle vs. Adtalem Global Education |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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