Correlation Between Diamyd Medical and American Eagle
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical 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 Diamyd Medical and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamyd Medical AB and American Eagle Outfitters, you can compare the effects of market volatilities on Diamyd Medical 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 Diamyd Medical with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and American Eagle.
Diversification Opportunities for Diamyd Medical and American Eagle
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Diamyd and American is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB 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 Diamyd Medical 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 Diamyd Medical AB 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 Diamyd Medical i.e., Diamyd Medical and American Eagle go up and down completely randomly.
Pair Corralation between Diamyd Medical and American Eagle
Assuming the 90 days horizon Diamyd Medical AB is expected to under-perform the American Eagle. In addition to that, Diamyd Medical is 1.79 times more volatile than American Eagle Outfitters. It trades about -0.17 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.16 per unit of volatility. If you would invest 1,548 in American Eagle Outfitters on December 28, 2024 and sell it today you would lose (448.00) from holding American Eagle Outfitters or give up 28.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.41% |
Values | Daily Returns |
Diamyd Medical AB vs. American Eagle Outfitters
Performance |
Timeline |
Diamyd Medical AB |
American Eagle Outfitters |
Diamyd Medical and American Eagle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Diamyd Medical and American Eagle
The main advantage of trading using opposite Diamyd Medical and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical 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.Diamyd Medical vs. Micron Technology | Diamyd Medical vs. ASM Pacific Technology | Diamyd Medical vs. Endeavour Mining PLC | Diamyd Medical vs. Globex Mining Enterprises |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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