Correlation Between Heartland Financial and AECOM TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Heartland Financial and AECOM TECHNOLOGY 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 Heartland Financial and AECOM TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Financial USA and AECOM TECHNOLOGY, you can compare the effects of market volatilities on Heartland Financial and AECOM TECHNOLOGY 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 Heartland Financial with a short position of AECOM TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Financial and AECOM TECHNOLOGY.
Diversification Opportunities for Heartland Financial and AECOM TECHNOLOGY
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Heartland and AECOM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY and Heartland Financial 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 Heartland Financial USA are associated (or correlated) with AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of Heartland Financial i.e., Heartland Financial and AECOM TECHNOLOGY go up and down completely randomly.
Pair Corralation between Heartland Financial and AECOM TECHNOLOGY
Assuming the 90 days horizon Heartland Financial USA is expected to generate 1.76 times more return on investment than AECOM TECHNOLOGY. However, Heartland Financial is 1.76 times more volatile than AECOM TECHNOLOGY. It trades about 0.05 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.06 per unit of risk. If you would invest 4,160 in Heartland Financial USA on September 2, 2024 and sell it today you would earn a total of 2,190 from holding Heartland Financial USA or generate 52.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Financial USA vs. AECOM TECHNOLOGY
Performance |
| Timeline |
| Heartland Financial USA |
| AECOM TECHNOLOGY |
Heartland Financial and AECOM TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Financial and AECOM TECHNOLOGY
The main advantage of trading using opposite Heartland Financial and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Financial position performs unexpectedly, AECOM TECHNOLOGY 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 AECOM TECHNOLOGY will offset losses from the drop in AECOM TECHNOLOGY's long position.| Heartland Financial vs. UNICREDIT SPA ADR | Heartland Financial vs. Deutsche Bank Aktiengesellschaft | Heartland Financial vs. Superior Plus Corp | Heartland Financial vs. Origin Agritech |
| AECOM TECHNOLOGY vs. GOODYEAR T RUBBER | AECOM TECHNOLOGY vs. EAGLE MATERIALS | AECOM TECHNOLOGY vs. Eagle Materials | AECOM TECHNOLOGY vs. Vulcan Materials |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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