Correlation Between PLAYSTUDIOS and American Eagle

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

By analyzing existing cross correlation between PLAYSTUDIOS A DL 0001 and American Eagle Outfitters, you can compare the effects of market volatilities on PLAYSTUDIOS 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 PLAYSTUDIOS with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYSTUDIOS and American Eagle.

Diversification Opportunities for PLAYSTUDIOS and American Eagle

-0.74

Correlation Coefficient

PLAYSTUDIOS  American Eagle

Pay attention - limited upside

The 3 months correlation between PLAYSTUDIOS and American is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PLAYSTUDIOS A DL 0001 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 PLAYSTUDIOS 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 PLAYSTUDIOS A DL 0001 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 PLAYSTUDIOS i.e., PLAYSTUDIOS and American Eagle go up and down completely randomly.

Pair Corralation between PLAYSTUDIOS and American Eagle

Assuming the 90 days horizon PLAYSTUDIOS A DL 0001 is expected to generate 1.55 times more return on investment than American Eagle. However, PLAYSTUDIOS is 1.55 times more volatile than American Eagle Outfitters. It trades about 0.14 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.07 per unit of risk. If you would invest  135.00  in PLAYSTUDIOS A DL 0001 on October 10, 2024 and sell it today you would earn a total of  46.00  from holding PLAYSTUDIOS A DL 0001 or generate 34.07% return on investment over 90 days.

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

PLAYSTUDIOS A DL 0001  vs.  American Eagle Outfitters

PLAYSTUDIOS A DL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYSTUDIOS A DL 0001 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PLAYSTUDIOS 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. Despite latest fragile 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.

Pair Trading with PLAYSTUDIOS and American Eagle

The main advantage of trading using opposite PLAYSTUDIOS and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYSTUDIOS 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 PLAYSTUDIOS A DL 0001 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.