Correlation Between American Eagle and SVENSKA CELLULO
Can any of the company-specific risk be diversified away by investing in both American Eagle and SVENSKA CELLULO 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 SVENSKA CELLULO 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 SVENSKA CELLULO B , you can compare the effects of market volatilities on American Eagle and SVENSKA CELLULO 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 SVENSKA CELLULO. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and SVENSKA CELLULO.
Diversification Opportunities for American Eagle and SVENSKA CELLULO
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and SVENSKA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and SVENSKA CELLULO B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA CELLULO B 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 SVENSKA CELLULO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA CELLULO B has no effect on the direction of American Eagle i.e., American Eagle and SVENSKA CELLULO go up and down completely randomly.
Pair Corralation between American Eagle and SVENSKA CELLULO
Assuming the 90 days trading horizon American Eagle Outfitters is expected to generate 1.51 times more return on investment than SVENSKA CELLULO. However, American Eagle is 1.51 times more volatile than SVENSKA CELLULO B . It trades about -0.09 of its potential returns per unit of risk. SVENSKA CELLULO B is currently generating about -0.14 per unit of risk. If you would invest 1,700 in American Eagle Outfitters on October 9, 2024 and sell it today you would lose (50.00) from holding American Eagle Outfitters or give up 2.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Eagle Outfitters vs. SVENSKA CELLULO B
Performance |
Timeline |
American Eagle Outfitters |
SVENSKA CELLULO B |
American Eagle and SVENSKA CELLULO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Eagle and SVENSKA CELLULO
The main advantage of trading using opposite American Eagle and SVENSKA CELLULO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, SVENSKA CELLULO 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 SVENSKA CELLULO will offset losses from the drop in SVENSKA CELLULO's long position.American Eagle vs. Shenandoah Telecommunications | American Eagle vs. TITAN MACHINERY | American Eagle vs. Chongqing Machinery Electric | American Eagle vs. Iridium Communications |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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