Correlation Between American Eagle and BRAGG GAMING

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

Diversification Opportunities for American Eagle and BRAGG GAMING

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between American and BRAGG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and BRAGG GAMING GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAGG GAMING GRP 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 BRAGG GAMING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAGG GAMING GRP has no effect on the direction of American Eagle i.e., American Eagle and BRAGG GAMING go up and down completely randomly.

Pair Corralation between American Eagle and BRAGG GAMING

Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the BRAGG GAMING. In addition to that, American Eagle is 1.04 times more volatile than BRAGG GAMING GRP. It trades about -0.01 of its total potential returns per unit of risk. BRAGG GAMING GRP is currently generating about 0.19 per unit of volatility. If you would invest  304.00  in BRAGG GAMING GRP on September 20, 2024 and sell it today you would earn a total of  48.00  from holding BRAGG GAMING GRP or generate 15.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

American Eagle Outfitters  vs.  BRAGG GAMING GRP

 Performance 
       Timeline  
American Eagle Outfitters 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days American 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 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.
BRAGG GAMING GRP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BRAGG GAMING GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

American Eagle and BRAGG GAMING Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Eagle and BRAGG GAMING

The main advantage of trading using opposite American Eagle and BRAGG GAMING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, BRAGG GAMING 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 BRAGG GAMING will offset losses from the drop in BRAGG GAMING's long position.
The idea behind American Eagle Outfitters and BRAGG GAMING GRP 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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