Correlation Between American Eagle and Europacific Growth
Can any of the company-specific risk be diversified away by investing in both American Eagle and Europacific Growth 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 American Eagle and Europacific Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Outfitters and Europacific Growth Fund, you can compare the effects of market volatilities on American Eagle and Europacific Growth 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 American Eagle with a short position of Europacific Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Europacific Growth.
Diversification Opportunities for American Eagle and Europacific Growth
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Europacific is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Europacific Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europacific Growth and American Eagle 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 American Eagle Outfitters are associated (or correlated) with Europacific Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europacific Growth has no effect on the direction of American Eagle i.e., American Eagle and Europacific Growth go up and down completely randomly.
Pair Corralation between American Eagle and Europacific Growth
Considering the 90-day investment horizon American Eagle Outfitters is expected to under-perform the Europacific Growth. In addition to that, American Eagle is 4.0 times more volatile than Europacific Growth Fund. It trades about -0.22 of its total potential returns per unit of risk. Europacific Growth Fund is currently generating about -0.35 per unit of volatility. If you would invest 5,793 in Europacific Growth Fund on January 20, 2024 and sell it today you would lose (230.00) from holding Europacific Growth Fund or give up 3.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Eagle Outfitters vs. Europacific Growth Fund
Performance |
| Timeline |
| American Eagle Outfitters |
| Europacific Growth |
American Eagle and Europacific Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Europacific Growth
The main advantage of trading using opposite American Eagle and Europacific Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Europacific Growth 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 Europacific Growth will offset losses from the drop in Europacific Growth's long position.| American Eagle vs. Urban Outfitters | American Eagle vs. Gap Inc | American Eagle vs. Foot Locker | American Eagle vs. Childrens Place |
| Europacific Growth vs. Income Fund Of | Europacific Growth vs. New World Fund | Europacific Growth vs. American Mutual Fund | Europacific Growth vs. American Mutual Fund |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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