Correlation Between ABC MartInc and American Eagle

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

By analyzing existing cross correlation between ABC MartInc and American Eagle Outfitters, you can compare the effects of market volatilities on ABC MartInc and American Eagle 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 ABC MartInc with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABC MartInc and American Eagle.

Diversification Opportunities for ABC MartInc and American Eagle

0.0

Correlation Coefficient

ABC MartInc  American Eagle

Pay attention - limited upside

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

Pair Corralation between ABC MartInc and American Eagle

If you would invest  5,943  in ABC MartInc on September 26, 2024 and sell it today you would earn a total of  0.00  from holding ABC MartInc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.44%
Values	Daily Returns

ABC MartInc  vs.  American Eagle Outfitters

ABC MartInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABC MartInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABC MartInc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

American Eagle Outfitters

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ABC MartInc and American Eagle

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

The idea behind ABC MartInc and American Eagle Outfitters 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.