Correlation Between American Aires and Fabrinet
Can any of the company-specific risk be diversified away by investing in both American Aires and Fabrinet 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 American Aires and Fabrinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Aires and Fabrinet, you can compare the effects of market volatilities on American Aires and Fabrinet 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 American Aires with a short position of Fabrinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Aires and Fabrinet.
Diversification Opportunities for American Aires and Fabrinet
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Fabrinet is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Aires and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and American Aires 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 American Aires are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of American Aires i.e., American Aires and Fabrinet go up and down completely randomly.
Pair Corralation between American Aires and Fabrinet
Assuming the 90 days horizon American Aires is expected to generate 2.82 times more return on investment than Fabrinet. However, American Aires is 2.82 times more volatile than Fabrinet. It trades about 0.05 of its potential returns per unit of risk. Fabrinet is currently generating about 0.04 per unit of risk. If you would invest 14.00 in American Aires on November 5, 2024 and sell it today you would earn a total of 0.00 from holding American Aires or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.65% |
| Values | Daily Returns |
American Aires vs. Fabrinet
Performance |
| Timeline |
| American Aires |
| Fabrinet |
American Aires and Fabrinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Aires and Fabrinet
The main advantage of trading using opposite American Aires and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Aires position performs unexpectedly, Fabrinet 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 Fabrinet will offset losses from the drop in Fabrinet's long position.| American Aires vs. alpha En | American Aires vs. Alps Electric Co | American Aires vs. Bitmine Immersion Technologies | American Aires vs. AT S Austria |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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