Correlation Between Charter Communications and AM EAGLE

Can any of the company-specific risk be diversified away by investing in both Charter Communications and AM 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 Charter Communications and AM EAGLE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charter Communications and AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on Charter Communications and AM 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 Charter Communications with a short position of AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and AM EAGLE.

Diversification Opportunities for Charter Communications and AM EAGLE

-0.62

Correlation Coefficient

Charter Communications  AM EAGLE

Excellent diversification

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

Pair Corralation between Charter Communications and AM EAGLE

Assuming the 90 days trading horizon Charter Communications is expected to generate 5.76 times less return on investment than AM EAGLE. But when comparing it to its historical volatility, Charter Communications is 1.25 times less risky than AM EAGLE. It trades about 0.01 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,378  in AM EAGLE OUTFITTERS on October 4, 2024 and sell it today you would earn a total of  282.00  from holding AM EAGLE OUTFITTERS or generate 20.46% return on investment over 90 days.

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

Charter Communications  vs.  AM EAGLE OUTFITTERS

Charter Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AM EAGLE OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Charter Communications and AM EAGLE

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

The idea behind Charter Communications and AM 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.