Correlation Between American Eagle and Lydall

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

Diversification Opportunities for American Eagle and Lydall

0.0

Correlation Coefficient

American Eagle  Lydall

Pay attention - limited upside

The 3 months correlation between American and Lydall is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Lydall Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lydall Inc 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 Lydall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lydall Inc has no effect on the direction of American Eagle i.e., American Eagle and Lydall go up and down completely randomly.

Pair Corralation between American Eagle and Lydall

If you would invest (100.00) in Lydall Inc on March 4, 2024 and sell it today you would earn a total of  100.00  from holding Lydall Inc or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Eagle Outfitters  vs.  Lydall Inc

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 unfluctuating 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.

Lydall Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lydall Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Lydall is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with American Eagle and Lydall

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

The idea behind American Eagle Outfitters and Lydall Inc 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.