Correlation Between AAP and Telesat Corp
Can any of the company-specific risk be diversified away by investing in both AAP and Telesat Corp 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 AAP and Telesat Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAP Inc and Telesat Corp, you can compare the effects of market volatilities on AAP and Telesat Corp 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 AAP with a short position of Telesat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAP and Telesat Corp.
Diversification Opportunities for AAP and Telesat Corp
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between AAP and Telesat is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding AAP Inc and Telesat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telesat Corp and AAP 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 AAP Inc are associated (or correlated) with Telesat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telesat Corp has no effect on the direction of AAP i.e., AAP and Telesat Corp go up and down completely randomly.
Pair Corralation between AAP and Telesat Corp
Given the investment horizon of 90 days AAP Inc is expected to generate 8.12 times more return on investment than Telesat Corp. However, AAP is 8.12 times more volatile than Telesat Corp. It trades about 0.13 of its potential returns per unit of risk. Telesat Corp is currently generating about 0.08 per unit of risk. If you would invest 0.02 in AAP Inc on November 3, 2024 and sell it today you would lose (0.01) from holding AAP Inc or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
AAP Inc vs. Telesat Corp
Performance |
| Timeline |
| AAP Inc |
| Telesat Corp |
AAP and Telesat Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAP and Telesat Corp
The main advantage of trading using opposite AAP and Telesat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAP position performs unexpectedly, Telesat Corp 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 Telesat Corp will offset losses from the drop in Telesat Corp's long position.The idea behind AAP Inc and Telesat Corp 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.| Telesat Corp vs. KVH Industries | Telesat Corp vs. Comtech Telecommunications Corp | Telesat Corp vs. Knowles Cor | Telesat Corp vs. Ituran Location 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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