Correlation Between Procter Gamble and American Eagle
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and American Eagle Outfitters, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and American Eagle.
Diversification Opportunities for Procter Gamble and American Eagle
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and American is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble 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 Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and American Eagle go up and down completely randomly.
Pair Corralation between Procter Gamble and American Eagle
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.44 times more return on investment than American Eagle. However, Procter Gamble is 2.26 times less risky than American Eagle. It trades about 0.35 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.02 per unit of risk. If you would invest 16,518 in Procter Gamble on September 1, 2024 and sell it today you would earn a total of 1,408 from holding Procter Gamble or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. American Eagle Outfitters
Performance |
| Timeline |
| Procter Gamble |
| American Eagle Outfitters |
Procter Gamble and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and American Eagle
The main advantage of trading using opposite Procter Gamble and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark | Procter Gamble vs. Estee Lauder Companies |
| American Eagle vs. Capri Holdings | American Eagle vs. Movado Group | American Eagle vs. Tapestry | American Eagle vs. Brilliant Earth Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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