Correlation Between Sparta AG and American Eagle
Can any of the company-specific risk be diversified away by investing in both Sparta AG 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 Sparta AG and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta AG and American Eagle Outfitters, you can compare the effects of market volatilities on Sparta AG 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 Sparta AG with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta AG and American Eagle.
Diversification Opportunities for Sparta AG and American Eagle
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sparta and American is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sparta AG 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 Sparta AG 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 Sparta AG 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 Sparta AG i.e., Sparta AG and American Eagle go up and down completely randomly.
Pair Corralation between Sparta AG and American Eagle
Assuming the 90 days trading horizon Sparta AG is expected to generate 0.13 times more return on investment than American Eagle. However, Sparta AG is 7.48 times less risky than American Eagle. It trades about 0.0 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.1 per unit of risk. If you would invest 3,240 in Sparta AG on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Sparta AG or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparta AG vs. American Eagle Outfitters
Performance |
| Timeline |
| Sparta AG |
| American Eagle Outfitters |
Sparta AG and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparta AG and American Eagle
The main advantage of trading using opposite Sparta AG and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta AG 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.| Sparta AG vs. Titan Machinery | Sparta AG vs. Sumitomo Mitsui Construction | Sparta AG vs. Australian Agricultural | Sparta AG vs. Federal Agricultural Mortgage |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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