Correlation Between American Eagle and RYU Apparel

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

Diversification Opportunities for American Eagle and RYU Apparel

0.0

Correlation Coefficient

American Eagle  RYU Apparel

Pay attention - limited upside

The 3 months correlation between American and RYU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and RYU Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RYU Apparel 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 RYU Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RYU Apparel has no effect on the direction of American Eagle i.e., American Eagle and RYU Apparel go up and down completely randomly.

Pair Corralation between American Eagle and RYU Apparel

If you would invest  1,760  in American Eagle Outfitters on September 5, 2024 and sell it today you would earn a total of  130.00  from holding American Eagle Outfitters or generate 7.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

American Eagle Outfitters  vs.  RYU Apparel

American Eagle Outfitters

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Eagle Outfitters are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, American Eagle may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RYU Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with American Eagle and RYU Apparel

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

The idea behind American Eagle Outfitters and RYU Apparel 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.