Correlation Between Urban Outfitters and American Eagle
Can any of the company-specific risk be diversified away by investing in both Urban Outfitters 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 Urban Outfitters and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Outfitters and American Eagle Outfitters, you can compare the effects of market volatilities on Urban Outfitters 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 Urban Outfitters with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Outfitters and American Eagle.
Diversification Opportunities for Urban Outfitters and American Eagle
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Urban and American is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters 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 Urban Outfitters 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 Urban Outfitters 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 Urban Outfitters i.e., Urban Outfitters and American Eagle go up and down completely randomly.
Pair Corralation between Urban Outfitters and American Eagle
Given the investment horizon of 90 days Urban Outfitters is expected to generate 1.19 times more return on investment than American Eagle. However, Urban Outfitters is 1.19 times more volatile than American Eagle Outfitters. It trades about 0.17 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.47 per unit of risk. If you would invest 3,681 in Urban Outfitters on August 27, 2024 and sell it today you would earn a total of 217.00 from holding Urban Outfitters or generate 5.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Urban Outfitters vs. American Eagle Outfitters
Performance |
Timeline |
Urban Outfitters |
American Eagle Outfitters |
Urban Outfitters and American Eagle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Urban Outfitters and American Eagle
The main advantage of trading using opposite Urban Outfitters and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Outfitters 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.Urban Outfitters vs. American Eagle Outfitters | Urban Outfitters vs. Foot Locker | Urban Outfitters vs. Childrens Place | Urban Outfitters vs. Abercrombie Fitch |
American Eagle vs. Urban Outfitters | American Eagle vs. Foot Locker | American Eagle vs. Childrens Place | American Eagle vs. Abercrombie Fitch |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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