Correlation Between American Eagle and Aritzia
Can any of the company-specific risk be diversified away by investing in both American Eagle and Aritzia 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 American Eagle and Aritzia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Outfitters and Aritzia, you can compare the effects of market volatilities on American Eagle and Aritzia 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 American Eagle with a short position of Aritzia. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Aritzia.
Diversification Opportunities for American Eagle and Aritzia
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Aritzia is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia and American Eagle 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 American Eagle Outfitters are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of American Eagle i.e., American Eagle and Aritzia go up and down completely randomly.
Pair Corralation between American Eagle and Aritzia
Considering the 90-day investment horizon American Eagle Outfitters is expected to under-perform the Aritzia. In addition to that, American Eagle is 1.9 times more volatile than Aritzia. It trades about -0.12 of its total potential returns per unit of risk. Aritzia is currently generating about 0.34 per unit of volatility. If you would invest 3,282 in Aritzia on September 24, 2024 and sell it today you would earn a total of 483.00 from holding Aritzia or generate 14.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
American Eagle Outfitters vs. Aritzia
Performance |
Timeline |
American Eagle Outfitters |
Aritzia |
American Eagle and Aritzia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Eagle and Aritzia
The main advantage of trading using opposite American Eagle and Aritzia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Aritzia 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 Aritzia will offset losses from the drop in Aritzia's long position.American Eagle vs. Macys Inc | American Eagle vs. Wayfair | American Eagle vs. 1StdibsCom | American Eagle vs. AutoNation |
Aritzia vs. Fast Retailing Co | Aritzia vs. Industria de Diseno | Aritzia vs. Shoe Carnival | Aritzia vs. Genesco |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |