Correlation Between Clean Energy and American Eagle
Can any of the company-specific risk be diversified away by investing in both Clean Energy 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 Clean Energy and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Energy Fuels and American Eagle Outfitters, you can compare the effects of market volatilities on Clean Energy 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 Clean Energy with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and American Eagle.
Diversification Opportunities for Clean Energy and American Eagle
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Clean and American is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels 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 Clean Energy 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 Clean Energy Fuels 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 Clean Energy i.e., Clean Energy and American Eagle go up and down completely randomly.
Pair Corralation between Clean Energy and American Eagle
Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the American Eagle. In addition to that, Clean Energy is 1.35 times more volatile than American Eagle Outfitters. It trades about -0.02 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.02 per unit of volatility. If you would invest 1,145 in American Eagle Outfitters on December 4, 2024 and sell it today you would earn a total of 15.00 from holding American Eagle Outfitters or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Clean Energy Fuels vs. American Eagle Outfitters
Performance |
| Timeline |
| Clean Energy Fuels |
| American Eagle Outfitters |
Clean Energy and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and American Eagle
The main advantage of trading using opposite Clean Energy and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy 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.| Clean Energy vs. Coeur Mining | Clean Energy vs. FIREWEED METALS P | Clean Energy vs. Applied Materials | Clean Energy vs. EAGLE MATERIALS |
| American Eagle vs. Nufarm Limited | American Eagle vs. Collins Foods Limited | American Eagle vs. DaChan Food Limited | American Eagle vs. Axfood AB |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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