Correlation Between Aedas Homes and Broadwind
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Broadwind 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 Aedas Homes and Broadwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SA and Broadwind, you can compare the effects of market volatilities on Aedas Homes and Broadwind 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 Aedas Homes with a short position of Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Broadwind.
Diversification Opportunities for Aedas Homes and Broadwind
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aedas and Broadwind is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind and Aedas Homes 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 Aedas Homes SA are associated (or correlated) with Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of Aedas Homes i.e., Aedas Homes and Broadwind go up and down completely randomly.
Pair Corralation between Aedas Homes and Broadwind
Assuming the 90 days horizon Aedas Homes SA is expected to generate 0.5 times more return on investment than Broadwind. However, Aedas Homes SA is 2.0 times less risky than Broadwind. It trades about 0.3 of its potential returns per unit of risk. Broadwind is currently generating about -0.3 per unit of risk. If you would invest 2,580 in Aedas Homes SA on November 6, 2024 and sell it today you would earn a total of 345.00 from holding Aedas Homes SA or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. Broadwind
Performance |
| Timeline |
| Aedas Homes SA |
| Broadwind |
Aedas Homes and Broadwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Broadwind
The main advantage of trading using opposite Aedas Homes and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.| Aedas Homes vs. Wenzhou Kangning Hospital | Aedas Homes vs. Scientific Games | Aedas Homes vs. HEALTHSTREAM | Aedas Homes vs. Cardinal Health |
| Broadwind vs. Pebblebrook Hotel Trust | Broadwind vs. Xenia Hotels Resorts | Broadwind vs. Sims Metal Management | Broadwind vs. OPKO HEALTH |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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