Correlation Between CarsalesCom and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and AM 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 CarsalesCom and AM EAGLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on CarsalesCom and AM 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 CarsalesCom with a short position of AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and AM EAGLE.
Diversification Opportunities for CarsalesCom and AM EAGLE
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CarsalesCom and AFG is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS and CarsalesCom 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 CarsalesCom are associated (or correlated) with AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of CarsalesCom i.e., CarsalesCom and AM EAGLE go up and down completely randomly.
Pair Corralation between CarsalesCom and AM EAGLE
Assuming the 90 days horizon CarsalesCom is expected to generate 0.66 times more return on investment than AM EAGLE. However, CarsalesCom is 1.51 times less risky than AM EAGLE. It trades about 0.11 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about 0.07 per unit of risk. If you would invest 1,328 in CarsalesCom on August 31, 2024 and sell it today you would earn a total of 1,232 from holding CarsalesCom or generate 92.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
CarsalesCom vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| CarsalesCom |
| AM EAGLE OUTFITTERS |
CarsalesCom and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and AM EAGLE
The main advantage of trading using opposite CarsalesCom and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, AM 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| CarsalesCom vs. AEGEAN AIRLINES | CarsalesCom vs. CompuGroup Medical SE | CarsalesCom vs. IMAGIN MEDICAL INC | CarsalesCom vs. Nok Airlines PCL |
| AM EAGLE vs. Gaztransport Technigaz SA | AM EAGLE vs. Zoom Video Communications | AM EAGLE vs. BII Railway Transportation | AM EAGLE vs. Warner Music 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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