Correlation Between American Eagle and Dundee Precious

Can any of the company-specific risk be diversified away by investing in both American Eagle and Dundee Precious 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 Dundee Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Eagle Gold and Dundee Precious Metals, you can compare the effects of market volatilities on American Eagle and Dundee Precious 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 Dundee Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Dundee Precious.

Diversification Opportunities for American Eagle and Dundee Precious

-0.62

Correlation Coefficient

American Eagle  Dundee Precious

Excellent diversification

The 3 months correlation between American and Dundee is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Gold and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals 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 Gold are associated (or correlated) with Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of American Eagle i.e., American Eagle and Dundee Precious go up and down completely randomly.

Pair Corralation between American Eagle and Dundee Precious

Assuming the 90 days horizon American Eagle Gold is expected to under-perform the Dundee Precious. In addition to that, American Eagle is 3.22 times more volatile than Dundee Precious Metals. It trades about -0.17 of its total potential returns per unit of risk. Dundee Precious Metals is currently generating about 0.23 per unit of volatility. If you would invest  936.00  in Dundee Precious Metals on November 29, 2024 and sell it today you would earn a total of  250.00  from holding Dundee Precious Metals or generate 26.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

American Eagle Gold  vs.  Dundee Precious Metals

American Eagle Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Eagle Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Dundee Precious Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dundee Precious Metals are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Dundee Precious reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Eagle and Dundee Precious

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

The idea behind American Eagle Gold and Dundee Precious Metals 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.