Correlation Between AM EAGLE and Playtech Plc

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

Diversification Opportunities for AM EAGLE and Playtech Plc

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between AFG and Playtech is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of AM EAGLE i.e., AM EAGLE and Playtech Plc go up and down completely randomly.

Pair Corralation between AM EAGLE and Playtech Plc

Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to under-perform the Playtech Plc. In addition to that, AM EAGLE is 1.45 times more volatile than Playtech plc. It trades about -0.03 of its total potential returns per unit of risk. Playtech plc is currently generating about 0.2 per unit of volatility. If you would invest  540.00  in Playtech plc on September 23, 2024 and sell it today you would earn a total of  314.00  from holding Playtech plc or generate 58.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AM EAGLE OUTFITTERS  vs.  Playtech plc

 Performance 
       Timeline  
AM EAGLE OUTFITTERS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 uncertain 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.
Playtech plc 

Risk-Adjusted Performance

0 of 100

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

AM EAGLE and Playtech Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AM EAGLE and Playtech Plc

The main advantage of trading using opposite AM EAGLE and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.
The idea behind AM EAGLE OUTFITTERS and Playtech plc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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