Correlation Between Lands End and American Eagle
Can any of the company-specific risk be diversified away by investing in both Lands End 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 Lands End and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lands End and American Eagle Outfitters, you can compare the effects of market volatilities on Lands End 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 Lands End with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lands End and American Eagle.
Diversification Opportunities for Lands End and American Eagle
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lands and American is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lands End 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 Lands End 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 Lands End 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 Lands End i.e., Lands End and American Eagle go up and down completely randomly.
Pair Corralation between Lands End and American Eagle
Allowing for the 90-day total investment horizon Lands End is expected to generate 1.5 times more return on investment than American Eagle. However, Lands End is 1.5 times more volatile than American Eagle Outfitters. It trades about 0.05 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 958.00 in Lands End on September 12, 2024 and sell it today you would earn a total of 547.00 from holding Lands End or generate 57.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lands End vs. American Eagle Outfitters
Performance |
| Timeline |
| Lands End |
| American Eagle Outfitters |
Lands End and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lands End and American Eagle
The main advantage of trading using opposite Lands End and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lands End 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.| Lands End vs. Foot Locker | Lands End vs. Duluth Holdings | Lands End vs. Destination XL Group | Lands End vs. Victorias Secret Co |
| American Eagle vs. Foot Locker | American Eagle vs. Lands End | American Eagle vs. Duluth Holdings | American Eagle vs. Destination XL 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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