Correlation Between American Eagle and Nib Holdings
Can any of the company-specific risk be diversified away by investing in both American Eagle and Nib Holdings 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 Nib Holdings 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 nib holdings limited, you can compare the effects of market volatilities on American Eagle and Nib Holdings 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 Nib Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Nib Holdings.
Diversification Opportunities for American Eagle and Nib Holdings
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Nib is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and nib holdings limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nib holdings limited 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 Nib Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nib holdings limited has no effect on the direction of American Eagle i.e., American Eagle and Nib Holdings go up and down completely randomly.
Pair Corralation between American Eagle and Nib Holdings
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 2.29 times more return on investment than Nib Holdings. However, American Eagle is 2.29 times more volatile than nib holdings limited. It trades about 0.1 of its potential returns per unit of risk. nib holdings limited is currently generating about -0.17 per unit of risk. If you would invest 1,578 in American Eagle Outfitters on October 25, 2024 and sell it today you would earn a total of 72.00 from holding American Eagle Outfitters or generate 4.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 94.44% |
Values | Daily Returns |
American Eagle Outfitters vs. nib holdings limited
Performance |
Timeline |
American Eagle Outfitters |
nib holdings limited |
American Eagle and Nib Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Eagle and Nib Holdings
The main advantage of trading using opposite American Eagle and Nib Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Nib Holdings 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 Nib Holdings will offset losses from the drop in Nib Holdings' long position.American Eagle vs. Highlight Communications AG | American Eagle vs. Geely Automobile Holdings | American Eagle vs. Iridium Communications | American Eagle vs. VULCAN MATERIALS |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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