Correlation Between NIPPON STEEL and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both NIPPON STEEL 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 NIPPON STEEL and AM EAGLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON STEEL SPADR and AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on NIPPON STEEL 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 NIPPON STEEL with a short position of AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON STEEL and AM EAGLE.
Diversification Opportunities for NIPPON STEEL and AM EAGLE
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between NIPPON and AFG is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON STEEL SPADR 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 NIPPON STEEL 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 NIPPON STEEL SPADR 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 NIPPON STEEL i.e., NIPPON STEEL and AM EAGLE go up and down completely randomly.
Pair Corralation between NIPPON STEEL and AM EAGLE
Assuming the 90 days trading horizon NIPPON STEEL SPADR is expected to generate 0.49 times more return on investment than AM EAGLE. However, NIPPON STEEL SPADR is 2.03 times less risky than AM EAGLE. It trades about 0.15 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about 0.06 per unit of risk. If you would invest 590.00 in NIPPON STEEL SPADR on September 3, 2024 and sell it today you would earn a total of 25.00 from holding NIPPON STEEL SPADR or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIPPON STEEL SPADR vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| NIPPON STEEL SPADR |
| AM EAGLE OUTFITTERS |
NIPPON STEEL and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON STEEL and AM EAGLE
The main advantage of trading using opposite NIPPON STEEL and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON STEEL 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.| NIPPON STEEL vs. UNITED RENTALS | NIPPON STEEL vs. PARKEN Sport Entertainment | NIPPON STEEL vs. ADRIATIC METALS LS 013355 | NIPPON STEEL vs. Eastman Chemical |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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