Correlation Between Under Armour and American Eagle
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and American Eagle Outfitters, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and American Eagle.
Diversification Opportunities for Under Armour and American Eagle
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Under and American is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C 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 Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and American Eagle go up and down completely randomly.
Pair Corralation between Under Armour and American Eagle
Allowing for the 90-day total investment horizon Under Armour C is expected to generate 2.43 times more return on investment than American Eagle. However, Under Armour is 2.43 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 0.02 per unit of risk. If you would invest 796.00 in Under Armour C on September 3, 2024 and sell it today you would earn a total of 81.00 from holding Under Armour C or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. American Eagle Outfitters
Performance |
| Timeline |
| Under Armour C |
| American Eagle Outfitters |
Under Armour and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and American Eagle
The main advantage of trading using opposite Under Armour and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
| American Eagle vs. Ross Stores | American Eagle vs. Childrens Place | American Eagle vs. Buckle Inc | American Eagle vs. Guess 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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