Correlation Between Aedas Homes and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications Holdings, you can compare the effects of market volatilities on Aedas Homes and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Consolidated Communications.
Diversification Opportunities for Aedas Homes and Consolidated Communications
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aedas and Consolidated is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Aedas Homes i.e., Aedas Homes and Consolidated Communications go up and down completely randomly.
Pair Corralation between Aedas Homes and Consolidated Communications
Assuming the 90 days horizon Aedas Homes SA is expected to under-perform the Consolidated Communications. In addition to that, Aedas Homes is 1.86 times more volatile than Consolidated Communications Holdings. It trades about -0.16 of its total potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.19 per unit of volatility. If you would invest 426.00 in Consolidated Communications Holdings on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Consolidated Communications Holdings or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aedas Homes SA vs. Consolidated Communications Ho
Performance |
| Timeline |
| Aedas Homes SA |
| Consolidated Communications |
Aedas Homes and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Consolidated Communications
The main advantage of trading using opposite Aedas Homes and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| Aedas Homes vs. Titan Machinery | Aedas Homes vs. Federal Agricultural Mortgage | Aedas Homes vs. Chongqing Machinery Electric | Aedas Homes vs. Penta Ocean Construction Co |
| Consolidated Communications vs. ATT Inc | Consolidated Communications vs. ATT Inc | Consolidated Communications vs. Nippon Telegraph and |
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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