Correlation Between American Eagle and 1StdibsCom

Can any of the company-specific risk be diversified away by investing in both American Eagle and 1StdibsCom 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 1StdibsCom 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 1StdibsCom, you can compare the effects of market volatilities on American Eagle and 1StdibsCom 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 1StdibsCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and 1StdibsCom.

Diversification Opportunities for American Eagle and 1StdibsCom

-0.48

Correlation Coefficient

American Eagle  1StdibsCom

Very good diversification

The 3 months correlation between American and 1StdibsCom is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and 1StdibsCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1StdibsCom 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 1StdibsCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1StdibsCom has no effect on the direction of American Eagle i.e., American Eagle and 1StdibsCom go up and down completely randomly.

Pair Corralation between American Eagle and 1StdibsCom

Considering the 90-day investment horizon American Eagle Outfitters is expected to generate 1.49 times more return on investment than 1StdibsCom. However, American Eagle is 1.49 times more volatile than 1StdibsCom. It trades about 0.06 of its potential returns per unit of risk. 1StdibsCom is currently generating about 0.03 per unit of risk. If you would invest  1,173  in American Eagle Outfitters on May 18, 2025 and sell it today you would earn a total of  126.00  from holding American Eagle Outfitters or generate 10.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

American Eagle Outfitters  vs.  1StdibsCom

American Eagle Outfitters

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in American Eagle Outfitters are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, American Eagle displayed solid returns over the last few months and may actually be approaching a breakup point.

1StdibsCom

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 1StdibsCom are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, 1StdibsCom is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Eagle and 1StdibsCom

The main advantage of trading using opposite American Eagle and 1StdibsCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, 1StdibsCom 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 1StdibsCom will offset losses from the drop in 1StdibsCom's long position.

The idea behind American Eagle Outfitters and 1StdibsCom 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.