Correlation Between American Eagle and US FOODS

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

Diversification Opportunities for American Eagle and US FOODS

0.18

Correlation Coefficient

American Eagle  US FOODS

Average diversification

The 3 months correlation between American and UFH is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and US FOODS HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US FOODS HOLDING 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 US FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US FOODS HOLDING has no effect on the direction of American Eagle i.e., American Eagle and US FOODS go up and down completely randomly.

Pair Corralation between American Eagle and US FOODS

Assuming the 90 days trading horizon American Eagle is expected to generate 1.32 times less return on investment than US FOODS. In addition to that, American Eagle is 2.85 times more volatile than US FOODS HOLDING. It trades about 0.04 of its total potential returns per unit of risk. US FOODS HOLDING is currently generating about 0.17 per unit of volatility. If you would invest  6,100  in US FOODS HOLDING on May 7, 2025 and sell it today you would earn a total of  1,000.00  from holding US FOODS HOLDING or generate 16.39% return on investment over 90 days.

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

American Eagle Outfitters  vs.  US FOODS HOLDING

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 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, American Eagle may actually be approaching a critical reversion point that can send shares even higher in September 2025.

US FOODS HOLDING

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US FOODS HOLDING are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, US FOODS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Eagle and US FOODS

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

The idea behind American Eagle Outfitters and US FOODS HOLDING 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.