Correlation Between SOLSTAD OFFSHORE and American Eagle
Can any of the company-specific risk be diversified away by investing in both SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOLSTAD OFFSHORE NK and American Eagle Outfitters, you can compare the effects of market volatilities on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and American Eagle.
Diversification Opportunities for SOLSTAD OFFSHORE and American Eagle
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SOLSTAD and American is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK 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 SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK 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 SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and American Eagle go up and down completely randomly.
Pair Corralation between SOLSTAD OFFSHORE and American Eagle
Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to generate 1.28 times more return on investment than American Eagle. However, SOLSTAD OFFSHORE is 1.28 times more volatile than American Eagle Outfitters. It trades about 0.08 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.06 per unit of risk. If you would invest 289.00 in SOLSTAD OFFSHORE NK on September 23, 2024 and sell it today you would earn a total of 47.00 from holding SOLSTAD OFFSHORE NK or generate 16.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SOLSTAD OFFSHORE NK vs. American Eagle Outfitters
Performance |
Timeline |
SOLSTAD OFFSHORE |
American Eagle Outfitters |
SOLSTAD OFFSHORE and American Eagle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SOLSTAD OFFSHORE and American Eagle
The main advantage of trading using opposite SOLSTAD OFFSHORE and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLSTAD OFFSHORE 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.SOLSTAD OFFSHORE vs. Lion Biotechnologies | SOLSTAD OFFSHORE vs. SWISS WATER DECAFFCOFFEE | SOLSTAD OFFSHORE vs. SBM OFFSHORE | SOLSTAD OFFSHORE vs. GLG LIFE TECH |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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