Correlation Between KIMBALL ELECTRONICS and American Eagle

Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KIMBALL ELECTRONICS and American Eagle Outfitters, you can compare the effects of market volatilities on KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and American Eagle.

Diversification Opportunities for KIMBALL ELECTRONICS and American Eagle

0.86

Correlation Coefficient

KIMBALL ELECTRONICS  American Eagle

Very poor diversification

The 3 months correlation between KIMBALL and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and American Eagle go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and American Eagle

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to generate 0.7 times more return on investment than American Eagle. However, KIMBALL ELECTRONICS is 1.42 times less risky than American Eagle. It trades about -0.08 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.19 per unit of risk. If you would invest  1,730  in KIMBALL ELECTRONICS on December 20, 2024 and sell it today you would lose (190.00) from holding KIMBALL ELECTRONICS or give up 10.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

KIMBALL ELECTRONICS  vs.  American Eagle Outfitters

KIMBALL ELECTRONICS

Risk-Adjusted Performance

Very Weak

Over the last 90 days KIMBALL ELECTRONICS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

American Eagle Outfitters

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Eagle Outfitters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KIMBALL ELECTRONICS and American Eagle

The main advantage of trading using opposite KIMBALL ELECTRONICS and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS 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.

The idea behind KIMBALL ELECTRONICS and American Eagle Outfitters pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.