Correlation Between Medical Properties and American Eagle
Can any of the company-specific risk be diversified away by investing in both Medical Properties 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 Medical Properties and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Properties Trust and American Eagle Outfitters, you can compare the effects of market volatilities on Medical Properties 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 Medical Properties with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and American Eagle.
Diversification Opportunities for Medical Properties and American Eagle
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Medical and American is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust 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 Medical Properties 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 Medical Properties Trust 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 Medical Properties i.e., Medical Properties and American Eagle go up and down completely randomly.
Pair Corralation between Medical Properties and American Eagle
Assuming the 90 days trading horizon Medical Properties Trust is expected to generate 1.19 times more return on investment than American Eagle. However, Medical Properties is 1.19 times more volatile than American Eagle Outfitters. It trades about 0.22 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.08 per unit of risk. If you would invest 393.00 in Medical Properties Trust on November 3, 2024 and sell it today you would earn a total of 57.00 from holding Medical Properties Trust or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Medical Properties Trust vs. American Eagle Outfitters
Performance |
| Timeline |
| Medical Properties Trust |
| American Eagle Outfitters |
Medical Properties and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and American Eagle
The main advantage of trading using opposite Medical Properties and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties 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.| Medical Properties vs. URBAN OUTFITTERS | Medical Properties vs. PLANT VEDA FOODS | Medical Properties vs. Urban Outfitters | Medical Properties vs. G III Apparel Group |
| American Eagle vs. GALENA MINING LTD | American Eagle vs. ARDAGH METAL PACDL 0001 | American Eagle vs. SLR Investment Corp | American Eagle vs. MAGNUM MINING EXP |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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