Correlation Between Peloton Interactive and American Outdoor
Can any of the company-specific risk be diversified away by investing in both Peloton Interactive and American Outdoor 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 Peloton Interactive and American Outdoor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peloton Interactive and American Outdoor Brands, you can compare the effects of market volatilities on Peloton Interactive and American Outdoor 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 Peloton Interactive with a short position of American Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peloton Interactive and American Outdoor.
Diversification Opportunities for Peloton Interactive and American Outdoor
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Peloton and American is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Peloton Interactive and American Outdoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Outdoor Brands and Peloton Interactive 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 Peloton Interactive are associated (or correlated) with American Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Outdoor Brands has no effect on the direction of Peloton Interactive i.e., Peloton Interactive and American Outdoor go up and down completely randomly.
Pair Corralation between Peloton Interactive and American Outdoor
Given the investment horizon of 90 days Peloton Interactive is expected to generate 2.22 times more return on investment than American Outdoor. However, Peloton Interactive is 2.22 times more volatile than American Outdoor Brands. It trades about 0.04 of its potential returns per unit of risk. American Outdoor Brands is currently generating about 0.03 per unit of risk. If you would invest 822.00 in Peloton Interactive on August 31, 2024 and sell it today you would earn a total of 212.00 from holding Peloton Interactive or generate 25.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peloton Interactive vs. American Outdoor Brands
Performance |
| Timeline |
| Peloton Interactive |
| American Outdoor Brands |
Peloton Interactive and American Outdoor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peloton Interactive and American Outdoor
The main advantage of trading using opposite Peloton Interactive and American Outdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peloton Interactive position performs unexpectedly, American Outdoor 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 Outdoor will offset losses from the drop in American Outdoor's long position.| Peloton Interactive vs. Zoom Video Communications | Peloton Interactive vs. DocuSign | Peloton Interactive vs. Pinterest | Peloton Interactive vs. Teladoc |
| American Outdoor vs. Clarus Corp | American Outdoor vs. Escalade Incorporated | American Outdoor vs. Johnson Outdoors | American Outdoor vs. JAKKS Pacific |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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