Correlation Between National Bank and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both National Bank and AM 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 National Bank and AM EAGLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on National Bank and AM 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 National Bank with a short position of AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and AM EAGLE.
Diversification Opportunities for National Bank and AM EAGLE
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and AFG is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS and National Bank 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 National Bank Holdings are associated (or correlated) with AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of National Bank i.e., National Bank and AM EAGLE go up and down completely randomly.
Pair Corralation between National Bank and AM EAGLE
Assuming the 90 days horizon National Bank Holdings is expected to under-perform the AM EAGLE. But the stock apears to be less risky and, when comparing its historical volatility, National Bank Holdings is 3.18 times less risky than AM EAGLE. The stock trades about -0.2 of its potential returns per unit of risk. The AM EAGLE OUTFITTERS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,680 in AM EAGLE OUTFITTERS on September 13, 2024 and sell it today you would lose (10.00) from holding AM EAGLE OUTFITTERS or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| National Bank Holdings |
| AM EAGLE OUTFITTERS |
National Bank and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and AM EAGLE
The main advantage of trading using opposite National Bank and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, AM 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| National Bank vs. Fifth Third Bancorp | National Bank vs. Regions Financial | National Bank vs. Superior Plus Corp | National Bank vs. SIVERS SEMICONDUCTORS AB |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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