Correlation Between American Eagle and GPS Old

Can any of the company-specific risk be diversified away by investing in both American Eagle and GPS Old 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 GPS Old 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 GPS Old, you can compare the effects of market volatilities on American Eagle and GPS Old 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 GPS Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and GPS Old.

Diversification Opportunities for American Eagle and GPS Old

0.0

Correlation Coefficient

American Eagle  GPS Old

Pay attention - limited upside

The 3 months correlation between American and GPS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and GPS Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPS Old 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 GPS Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPS Old has no effect on the direction of American Eagle i.e., American Eagle and GPS Old go up and down completely randomly.

Pair Corralation between American Eagle and GPS Old

If you would invest (100.00) in GPS Old on November 19, 2024 and sell it today you would earn a total of  100.00  from holding GPS Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Eagle Outfitters  vs.  GPS Old

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

GPS Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days GPS Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GPS Old is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Eagle and GPS Old

The main advantage of trading using opposite American Eagle and GPS Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, GPS Old 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 GPS Old will offset losses from the drop in GPS Old's long position.

The idea behind American Eagle Outfitters and GPS Old 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.