Correlation Between Aedas Homes and NBI Bearings
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and NBI Bearings 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 NBI Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SL and NBI Bearings Europe, you can compare the effects of market volatilities on Aedas Homes and NBI Bearings 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 NBI Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and NBI Bearings.
Diversification Opportunities for Aedas Homes and NBI Bearings
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aedas and NBI is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SL and NBI Bearings Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Bearings Europe 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 SL are associated (or correlated) with NBI Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Bearings Europe has no effect on the direction of Aedas Homes i.e., Aedas Homes and NBI Bearings go up and down completely randomly.
Pair Corralation between Aedas Homes and NBI Bearings
Assuming the 90 days trading horizon Aedas Homes SL is expected to generate 1.18 times more return on investment than NBI Bearings. However, Aedas Homes is 1.18 times more volatile than NBI Bearings Europe. It trades about 0.14 of its potential returns per unit of risk. NBI Bearings Europe is currently generating about -0.03 per unit of risk. If you would invest 914.00 in Aedas Homes SL on December 7, 2024 and sell it today you would earn a total of 1,891 from holding Aedas Homes SL or generate 206.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SL vs. NBI Bearings Europe
Performance |
| Timeline |
| Aedas Homes SL |
| NBI Bearings Europe |
Aedas Homes and NBI Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and NBI Bearings
The main advantage of trading using opposite Aedas Homes and NBI Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, NBI Bearings 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 NBI Bearings will offset losses from the drop in NBI Bearings' long position.| Aedas Homes vs. Neinor Homes SLU | ||
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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