Correlation Between Trade Desk and American Eagle
Can any of the company-specific risk be diversified away by investing in both Trade Desk 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 Trade Desk and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Trade Desk and American Eagle Outfitters, you can compare the effects of market volatilities on Trade Desk 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 Trade Desk with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Desk and American Eagle.
Diversification Opportunities for Trade Desk and American Eagle
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Trade and American is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk 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 Trade Desk 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 The Trade Desk 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 Trade Desk i.e., Trade Desk and American Eagle go up and down completely randomly.
Pair Corralation between Trade Desk and American Eagle
Assuming the 90 days trading horizon The Trade Desk is expected to generate 0.91 times more return on investment than American Eagle. However, The Trade Desk is 1.1 times less risky than American Eagle. It trades about -0.06 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.15 per unit of risk. If you would invest 11,796 in The Trade Desk on November 7, 2024 and sell it today you would lose (360.00) from holding The Trade Desk or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Trade Desk vs. American Eagle Outfitters
Performance |
| Timeline |
| Trade Desk |
| American Eagle Outfitters |
Trade Desk and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Desk and American Eagle
The main advantage of trading using opposite Trade Desk and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk 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.| Trade Desk vs. Hyster Yale Materials Handling | Trade Desk vs. CSSC Offshore Marine | Trade Desk vs. Yanzhou Coal Mining | Trade Desk vs. MINCO SILVER |
| American Eagle vs. Osisko Metals | American Eagle vs. Darden Restaurants | American Eagle vs. JAPAN TOBACCO UNSPADR12 | American Eagle vs. GREENX METALS LTD |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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