Correlation Between AAON and Atlas Engineered

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Can any of the company-specific risk be diversified away by investing in both AAON and Atlas Engineered 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 AAON and Atlas Engineered into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAON Inc and Atlas Engineered Products, you can compare the effects of market volatilities on AAON and Atlas Engineered 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 AAON with a short position of Atlas Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAON and Atlas Engineered.

Diversification Opportunities for AAON and Atlas Engineered

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AAON and Atlas is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and Atlas Engineered Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Engineered Products and AAON 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 AAON Inc are associated (or correlated) with Atlas Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Engineered Products has no effect on the direction of AAON i.e., AAON and Atlas Engineered go up and down completely randomly.

Pair Corralation between AAON and Atlas Engineered

Given the investment horizon of 90 days AAON Inc is expected to generate 0.47 times more return on investment than Atlas Engineered. However, AAON Inc is 2.15 times less risky than Atlas Engineered. It trades about 0.38 of its potential returns per unit of risk. Atlas Engineered Products is currently generating about 0.0 per unit of risk. If you would invest  12,268  in AAON Inc on October 26, 2024 and sell it today you would earn a total of  1,427  from holding AAON Inc or generate 11.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AAON Inc  vs.  Atlas Engineered Products

 Performance 
       Timeline  
AAON Inc 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AAON Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AAON displayed solid returns over the last few months and may actually be approaching a breakup point.
Atlas Engineered Products 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Atlas Engineered Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AAON and Atlas Engineered Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AAON and Atlas Engineered

The main advantage of trading using opposite AAON and Atlas Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAON position performs unexpectedly, Atlas Engineered 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 Atlas Engineered will offset losses from the drop in Atlas Engineered's long position.
The idea behind AAON Inc and Atlas Engineered Products pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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