Correlation Between Virtus Investment and American Eagle
Can any of the company-specific risk be diversified away by investing in both Virtus Investment 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 Virtus Investment and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Investment Partners and American Eagle Outfitters, you can compare the effects of market volatilities on Virtus Investment 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 Virtus Investment with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Investment and American Eagle.
Diversification Opportunities for Virtus Investment and American Eagle
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virtus and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners 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 Virtus Investment 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 Virtus Investment Partners 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 Virtus Investment i.e., Virtus Investment and American Eagle go up and down completely randomly.
Pair Corralation between Virtus Investment and American Eagle
Assuming the 90 days horizon Virtus Investment Partners is expected to generate 1.09 times more return on investment than American Eagle. However, Virtus Investment is 1.09 times more volatile than American Eagle Outfitters. It trades about -0.26 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.43 per unit of risk. If you would invest 19,377 in Virtus Investment Partners on November 27, 2024 and sell it today you would lose (2,377) from holding Virtus Investment Partners or give up 12.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Investment Partners vs. American Eagle Outfitters
Performance |
| Timeline |
| Virtus Investment |
| American Eagle Outfitters |
Virtus Investment and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Investment and American Eagle
The main advantage of trading using opposite Virtus Investment and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Investment 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.| Virtus Investment vs. Gladstone Investment | Virtus Investment vs. TIANDE CHEMICAL | Virtus Investment vs. Sekisui Chemical Co | Virtus Investment vs. Silicon Motion Technology |
| American Eagle vs. Gaming and Leisure | American Eagle vs. PLAYWAY SA ZY 10 | American Eagle vs. BJs Restaurants | American Eagle vs. Air Transport Services |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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