Correlation Between Dalata Hotel and American Eagle

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

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

Diversification Opportunities for Dalata Hotel and American Eagle

0.05

Correlation Coefficient

Dalata Hotel  American Eagle

Significant diversification

The 3 months correlation between Dalata and American is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group 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 Dalata Hotel 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 Dalata Hotel Group 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 Dalata Hotel i.e., Dalata Hotel and American Eagle go up and down completely randomly.

Pair Corralation between Dalata Hotel and American Eagle

If you would invest  488.00  in Dalata Hotel Group on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Dalata Hotel Group or generate 0.0% return on investment over 90 days.

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

Dalata Hotel Group  vs.  American Eagle Outfitters

Dalata Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalata Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dalata Hotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the 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 inconsistent performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Dalata Hotel and American Eagle

The main advantage of trading using opposite Dalata Hotel and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalata Hotel 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 Dalata Hotel Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.