Correlation Between NTG Nordic and American Eagle
Can any of the company-specific risk be diversified away by investing in both NTG Nordic 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 NTG Nordic and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and American Eagle Outfitters, you can compare the effects of market volatilities on NTG Nordic 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 NTG Nordic with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and American Eagle.
Diversification Opportunities for NTG Nordic and American Eagle
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NTG and American is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport 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 NTG Nordic 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 NTG Nordic Transport 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 NTG Nordic i.e., NTG Nordic and American Eagle go up and down completely randomly.
Pair Corralation between NTG Nordic and American Eagle
Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the American Eagle. But the stock apears to be less risky and, when comparing its historical volatility, NTG Nordic Transport is 1.09 times less risky than American Eagle. The stock trades about -0.01 of its potential returns per unit of risk. The American Eagle Outfitters is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,460 in American Eagle Outfitters on October 25, 2024 and sell it today you would earn a total of 190.00 from holding American Eagle Outfitters or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NTG Nordic Transport vs. American Eagle Outfitters
Performance |
| Timeline |
| NTG Nordic Transport |
| American Eagle Outfitters |
NTG Nordic and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and American Eagle
The main advantage of trading using opposite NTG Nordic and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic 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.| NTG Nordic vs. FIH MOBILE | NTG Nordic vs. MAVEN WIRELESS SWEDEN | NTG Nordic vs. SCOTT TECHNOLOGY | NTG Nordic vs. Charter Communications |
| American Eagle vs. FAST RETAIL ADR | American Eagle vs. TRADEDOUBLER AB SK | American Eagle vs. SALESFORCE INC CDR | American Eagle vs. TRADEGATE |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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