Correlation Between Broadwind and AECOM TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Broadwind 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 Broadwind and AECOM TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind and AECOM TECHNOLOGY, you can compare the effects of market volatilities on Broadwind 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 Broadwind with a short position of AECOM TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and AECOM TECHNOLOGY.
Diversification Opportunities for Broadwind and AECOM TECHNOLOGY
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Broadwind and AECOM is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY and Broadwind 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 Broadwind 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 Broadwind i.e., Broadwind and AECOM TECHNOLOGY go up and down completely randomly.
Pair Corralation between Broadwind and AECOM TECHNOLOGY
Assuming the 90 days trading horizon Broadwind is expected to generate 4.43 times more return on investment than AECOM TECHNOLOGY. However, Broadwind is 4.43 times more volatile than AECOM TECHNOLOGY. It trades about 0.24 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about -0.09 per unit of risk. If you would invest 164.00 in Broadwind on October 11, 2024 and sell it today you would earn a total of 29.00 from holding Broadwind or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadwind vs. AECOM TECHNOLOGY
Performance |
| Timeline |
| Broadwind |
| AECOM TECHNOLOGY |
Broadwind and AECOM TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadwind and AECOM TECHNOLOGY
The main advantage of trading using opposite Broadwind and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind 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.| Broadwind vs. MAGNUM MINING EXP | Broadwind vs. De Grey Mining | Broadwind vs. ARROW ELECTRONICS | Broadwind vs. Perseus Mining Limited |
| AECOM TECHNOLOGY vs. 24SEVENOFFICE GROUP AB | AECOM TECHNOLOGY vs. Broadwind | AECOM TECHNOLOGY vs. Texas Roadhouse | AECOM TECHNOLOGY vs. Broadcom |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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