Correlation Between VIAPLAY GROUP and American Eagle

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

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

Diversification Opportunities for VIAPLAY GROUP and American Eagle

0.61

Correlation Coefficient

VIAPLAY GROUP  American Eagle

Poor diversification

The 3 months correlation between VIAPLAY and American is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding VIAPLAY GROUP 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 VIAPLAY GROUP 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 VIAPLAY GROUP 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 VIAPLAY GROUP i.e., VIAPLAY GROUP and American Eagle go up and down completely randomly.

Pair Corralation between VIAPLAY GROUP and American Eagle

Assuming the 90 days horizon VIAPLAY GROUP is expected to generate 1.01 times less return on investment than American Eagle. In addition to that, VIAPLAY GROUP is 2.2 times more volatile than American Eagle Outfitters. It trades about 0.03 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.07 per unit of volatility. If you would invest  1,588  in American Eagle Outfitters on October 24, 2024 and sell it today you would earn a total of  52.00  from holding American Eagle Outfitters or generate 3.27% return on investment over 90 days.

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

VIAPLAY GROUP AB  vs.  American Eagle Outfitters

VIAPLAY GROUP AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIAPLAY GROUP AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company 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 latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with VIAPLAY GROUP and American Eagle

The main advantage of trading using opposite VIAPLAY GROUP and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIAPLAY GROUP 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 VIAPLAY GROUP AB 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.