Correlation Between QUEEN S and American Eagle

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

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

Diversification Opportunities for QUEEN S and American Eagle

-0.24

Correlation Coefficient

QUEEN S  American Eagle

Very good diversification

The 3 months correlation between QUEEN and American is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding QUEEN S ROAD 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 QUEEN S 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 QUEEN S ROAD 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 QUEEN S i.e., QUEEN S and American Eagle go up and down completely randomly.

Pair Corralation between QUEEN S and American Eagle

Assuming the 90 days horizon QUEEN S ROAD is expected to under-perform the American Eagle. In addition to that, QUEEN S is 1.92 times more volatile than American Eagle Outfitters. It trades about -0.24 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.15 per unit of volatility. If you would invest  1,700  in American Eagle Outfitters on October 11, 2024 and sell it today you would lose (90.00) from holding American Eagle Outfitters or give up 5.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

QUEEN S ROAD  vs.  American Eagle Outfitters

QUEEN S ROAD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in QUEEN S ROAD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, QUEEN S reported solid returns over the last few months and may actually be approaching a breakup point.

American Eagle Outfitters

Risk-Adjusted Performance

0 of 100

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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with QUEEN S and American Eagle

The main advantage of trading using opposite QUEEN S and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QUEEN S 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 QUEEN S ROAD 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.