Correlation Between American Eagle and TOTAL GABON
Can any of the company-specific risk be diversified away by investing in both American Eagle and TOTAL GABON 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 TOTAL GABON 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 TOTAL GABON, you can compare the effects of market volatilities on American Eagle and TOTAL GABON 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 TOTAL GABON. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and TOTAL GABON.
Diversification Opportunities for American Eagle and TOTAL GABON
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and TOTAL is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and TOTAL GABON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL GABON 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 TOTAL GABON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL GABON has no effect on the direction of American Eagle i.e., American Eagle and TOTAL GABON go up and down completely randomly.
Pair Corralation between American Eagle and TOTAL GABON
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the TOTAL GABON. In addition to that, American Eagle is 1.85 times more volatile than TOTAL GABON. It trades about -0.26 of its total potential returns per unit of risk. TOTAL GABON is currently generating about 0.08 per unit of volatility. If you would invest 16,700 in TOTAL GABON on December 2, 2024 and sell it today you would earn a total of 650.00 from holding TOTAL GABON or generate 3.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Eagle Outfitters vs. TOTAL GABON
Performance |
Timeline |
American Eagle Outfitters |
TOTAL GABON |
American Eagle and TOTAL GABON Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Eagle and TOTAL GABON
The main advantage of trading using opposite American Eagle and TOTAL GABON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, TOTAL GABON 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 TOTAL GABON will offset losses from the drop in TOTAL GABON's long position.American Eagle vs. NORTHEAST UTILITIES | American Eagle vs. British American Tobacco | American Eagle vs. Vienna Insurance Group | American Eagle vs. The Hanover Insurance |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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