Correlation Between AM EAGLE and Boston Properties

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

By analyzing existing cross correlation between AM EAGLE OUTFITTERS and Boston Properties, you can compare the effects of market volatilities on AM EAGLE and Boston Properties 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 AM EAGLE with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Boston Properties.

Diversification Opportunities for AM EAGLE and Boston Properties

0.3

Correlation Coefficient

AM EAGLE  Boston Properties

Weak diversification

The 3 months correlation between AFG and Boston is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and AM 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 AM EAGLE OUTFITTERS are associated (or correlated) with Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of AM EAGLE i.e., AM EAGLE and Boston Properties go up and down completely randomly.

Pair Corralation between AM EAGLE and Boston Properties

Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to generate 1.08 times more return on investment than Boston Properties. However, AM EAGLE is 1.08 times more volatile than Boston Properties. It trades about -0.09 of its potential returns per unit of risk. Boston Properties is currently generating about -0.2 per unit of risk. If you would invest  1,710  in AM EAGLE OUTFITTERS on October 8, 2024 and sell it today you would lose (60.00) from holding AM EAGLE OUTFITTERS or give up 3.51% of portfolio value over 90 days.

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

AM EAGLE OUTFITTERS  vs.  Boston Properties

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AM EAGLE OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental 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.

Boston Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Boston Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AM EAGLE and Boston Properties

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

The idea behind AM EAGLE OUTFITTERS and Boston Properties 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.