Correlation Between AES Corp and Various Eateries
Can any of the company-specific risk be diversified away by investing in both AES Corp and Various Eateries 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 AES Corp and Various Eateries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AES Corp and Various Eateries PLC, you can compare the effects of market volatilities on AES Corp and Various Eateries 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 AES Corp with a short position of Various Eateries. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES Corp and Various Eateries.
Diversification Opportunities for AES Corp and Various Eateries
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AES and Various is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp and Various Eateries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Various Eateries PLC and AES Corp 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 AES Corp are associated (or correlated) with Various Eateries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Various Eateries PLC has no effect on the direction of AES Corp i.e., AES Corp and Various Eateries go up and down completely randomly.
Pair Corralation between AES Corp and Various Eateries
Assuming the 90 days trading horizon AES Corp is expected to under-perform the Various Eateries. In addition to that, AES Corp is 8.0 times more volatile than Various Eateries PLC. It trades about -0.14 of its total potential returns per unit of risk. Various Eateries PLC is currently generating about -0.07 per unit of volatility. If you would invest 1,800 in Various Eateries PLC on September 4, 2024 and sell it today you would lose (25.00) from holding Various Eateries PLC or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AES Corp vs. Various Eateries PLC
Performance |
| Timeline |
| AES Corp |
| Various Eateries PLC |
AES Corp and Various Eateries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AES Corp and Various Eateries
The main advantage of trading using opposite AES Corp and Various Eateries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES Corp position performs unexpectedly, Various Eateries 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 Various Eateries will offset losses from the drop in Various Eateries' long position.| AES Corp vs. Various Eateries PLC | AES Corp vs. Jacquet Metal Service | AES Corp vs. Panther Metals PLC | AES Corp vs. Wheaton Precious Metals |
| Various Eateries vs. Samsung Electronics Co | Various Eateries vs. Samsung Electronics Co | Various Eateries vs. Hyundai Motor | Various Eateries vs. Toyota Motor Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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