Correlation Between Tenaris SA and American Eagle
Can any of the company-specific risk be diversified away by investing in both Tenaris SA 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 Tenaris SA and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenaris SA ADR and American Eagle Outfitters, you can compare the effects of market volatilities on Tenaris SA 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 Tenaris SA with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and American Eagle.
Diversification Opportunities for Tenaris SA and American Eagle
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tenaris and American is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR 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 Tenaris SA 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 Tenaris SA ADR 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 Tenaris SA i.e., Tenaris SA and American Eagle go up and down completely randomly.
Pair Corralation between Tenaris SA and American Eagle
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 0.71 times more return on investment than American Eagle. However, Tenaris SA ADR is 1.41 times less risky than American Eagle. It trades about 0.09 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.03 per unit of risk. If you would invest 3,182 in Tenaris SA ADR on September 1, 2024 and sell it today you would earn a total of 651.00 from holding Tenaris SA ADR or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. American Eagle Outfitters
Performance |
| Timeline |
| Tenaris SA ADR |
| American Eagle Outfitters |
Tenaris SA and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and American Eagle
The main advantage of trading using opposite Tenaris SA and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA 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.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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