Correlation Between Ribbon Communications and American Eagle
Can any of the company-specific risk be diversified away by investing in both Ribbon Communications 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 Ribbon Communications and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ribbon Communications and American Eagle Outfitters, you can compare the effects of market volatilities on Ribbon Communications 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 Ribbon Communications with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ribbon Communications and American Eagle.
Diversification Opportunities for Ribbon Communications and American Eagle
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ribbon and American is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ribbon Communications 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 Ribbon Communications 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 Ribbon Communications 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 Ribbon Communications i.e., Ribbon Communications and American Eagle go up and down completely randomly.
Pair Corralation between Ribbon Communications and American Eagle
Assuming the 90 days trading horizon Ribbon Communications is expected to generate 1.29 times less return on investment than American Eagle. In addition to that, Ribbon Communications is 1.25 times more volatile than American Eagle Outfitters. It trades about 0.03 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.05 per unit of volatility. If you would invest 1,150 in American Eagle Outfitters on September 12, 2024 and sell it today you would earn a total of 550.00 from holding American Eagle Outfitters or generate 47.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ribbon Communications vs. American Eagle Outfitters
Performance |
| Timeline |
| Ribbon Communications |
| American Eagle Outfitters |
Ribbon Communications and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ribbon Communications and American Eagle
The main advantage of trading using opposite Ribbon Communications and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ribbon Communications 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.| Ribbon Communications vs. Superior Plus Corp | Ribbon Communications vs. SIVERS SEMICONDUCTORS AB | Ribbon Communications vs. Norsk Hydro ASA | Ribbon Communications vs. Reliance Steel Aluminum |
| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |