Correlation Between Western Digital and American Eagle
Can any of the company-specific risk be diversified away by investing in both Western Digital 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 Western Digital and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and American Eagle Outfitters, you can compare the effects of market volatilities on Western Digital 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 Western Digital with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and American Eagle.
Diversification Opportunities for Western Digital and American Eagle
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital 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 Western Digital 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 Western Digital 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 Western Digital i.e., Western Digital and American Eagle go up and down completely randomly.
Pair Corralation between Western Digital and American Eagle
Considering the 90-day investment horizon Western Digital is expected to generate 0.54 times more return on investment than American Eagle. However, Western Digital is 1.84 times less risky than American Eagle. It trades about 0.18 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.01 per unit of risk. If you would invest 6,396 in Western Digital on September 13, 2024 and sell it today you would earn a total of 534.00 from holding Western Digital or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. American Eagle Outfitters
Performance |
| Timeline |
| Western Digital |
| American Eagle Outfitters |
Western Digital and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and American Eagle
The main advantage of trading using opposite Western Digital and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital 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.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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