Correlation Between 83001AAC6 and American Eagle

Can any of the company-specific risk be diversified away by investing in both 83001AAC6 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 83001AAC6 and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Six Flags Entertainment and American Eagle Outfitters, you can compare the effects of market volatilities on 83001AAC6 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 83001AAC6 with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of 83001AAC6 and American Eagle.

Diversification Opportunities for 83001AAC6 and American Eagle

0.34

Correlation Coefficient

83001AAC6  American Eagle

Weak diversification

The 3 months correlation between 83001AAC6 and American is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Entertainment 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 83001AAC6 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 Six Flags Entertainment 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 83001AAC6 i.e., 83001AAC6 and American Eagle go up and down completely randomly.

Pair Corralation between 83001AAC6 and American Eagle

Assuming the 90 days trading horizon 83001AAC6 is expected to generate 8.06 times less return on investment than American Eagle. But when comparing it to its historical volatility, Six Flags Entertainment is 5.78 times less risky than American Eagle. It trades about 0.02 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,381  in American Eagle Outfitters on September 21, 2024 and sell it today you would earn a total of  255.00  from holding American Eagle Outfitters or generate 18.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.85%
Values	Daily Returns

Six Flags Entertainment  vs.  American Eagle Outfitters

Six Flags Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Six Flags Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 83001AAC6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 inconsistent 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 83001AAC6 and American Eagle

The main advantage of trading using opposite 83001AAC6 and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 83001AAC6 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 Six Flags Entertainment 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.