Correlation Between Platinum Investment and American Eagle
Can any of the company-specific risk be diversified away by investing in both Platinum Investment 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 Platinum Investment and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Investment Management and American Eagle Outfitters, you can compare the effects of market volatilities on Platinum Investment 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 Platinum Investment with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Investment and American Eagle.
Diversification Opportunities for Platinum Investment and American Eagle
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Platinum and American is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management 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 Platinum Investment 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 Platinum Investment Management 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 Platinum Investment i.e., Platinum Investment and American Eagle go up and down completely randomly.
Pair Corralation between Platinum Investment and American Eagle
Assuming the 90 days horizon Platinum Investment Management is expected to generate 2.34 times more return on investment than American Eagle. However, Platinum Investment is 2.34 times more volatile than American Eagle Outfitters. It trades about -0.11 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.47 per unit of risk. If you would invest 41.00 in Platinum Investment Management on December 1, 2024 and sell it today you would lose (6.00) from holding Platinum Investment Management or give up 14.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum Investment Management vs. American Eagle Outfitters
Performance |
| Timeline |
| Platinum Investment |
| American Eagle Outfitters |
Platinum Investment and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Investment and American Eagle
The main advantage of trading using opposite Platinum Investment and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Investment 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.| Platinum Investment vs. Norwegian Air Shuttle | Platinum Investment vs. PRECISION DRILLING P | Platinum Investment vs. CALTAGIRONE EDITORE | Platinum Investment vs. Tianjin Capital Environmental |
| American Eagle vs. HUTCHISON TELECOMM | American Eagle vs. Chengdu PUTIAN Telecommunications | American Eagle vs. The Yokohama Rubber | American Eagle vs. NEWELL RUBBERMAID |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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