Correlation Between AM EAGLE and TAL Education

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

Diversification Opportunities for AM EAGLE and TAL Education

0.21

Correlation Coefficient

AM EAGLE  TAL Education

Modest diversification

The 3 months correlation between AFG and TAL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group 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 TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of AM EAGLE i.e., AM EAGLE and TAL Education go up and down completely randomly.

Pair Corralation between AM EAGLE and TAL Education

Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to under-perform the TAL Education. In addition to that, AM EAGLE is 1.34 times more volatile than TAL Education Group. It trades about -0.21 of its total potential returns per unit of risk. TAL Education Group is currently generating about -0.12 per unit of volatility. If you would invest  975.00  in TAL Education Group on October 5, 2024 and sell it today you would lose (60.00) from holding TAL Education Group or give up 6.15% 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.  TAL Education Group

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 latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

TAL Education Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TAL Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AM EAGLE and TAL Education

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

The idea behind AM EAGLE OUTFITTERS and TAL Education Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.