Correlation Between Aeris Environmental and British Amer
Can any of the company-specific risk be diversified away by investing in both Aeris Environmental and British Amer 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 Aeris Environmental and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeris Environmental and Bailador Technology Invest, you can compare the effects of market volatilities on Aeris Environmental and British Amer 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 Aeris Environmental with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeris Environmental and British Amer.
Diversification Opportunities for Aeris Environmental and British Amer
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aeris and British is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aeris Environmental and Bailador Technology Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bailador Technology and Aeris Environmental 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 Aeris Environmental are associated (or correlated) with British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bailador Technology has no effect on the direction of Aeris Environmental i.e., Aeris Environmental and British Amer go up and down completely randomly.
Pair Corralation between Aeris Environmental and British Amer
Assuming the 90 days trading horizon Aeris Environmental is expected to generate 3.32 times more return on investment than British Amer. However, Aeris Environmental is 3.32 times more volatile than Bailador Technology Invest. It trades about 0.09 of its potential returns per unit of risk. Bailador Technology Invest is currently generating about 0.06 per unit of risk. If you would invest 6.40 in Aeris Environmental on August 31, 2024 and sell it today you would earn a total of 2.60 from holding Aeris Environmental or generate 40.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeris Environmental vs. Bailador Technology Invest
Performance |
| Timeline |
| Aeris Environmental |
| Bailador Technology |
Aeris Environmental and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeris Environmental and British Amer
The main advantage of trading using opposite Aeris Environmental and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeris Environmental position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.| Aeris Environmental vs. Champion Iron | Aeris Environmental vs. Tombador Iron | Aeris Environmental vs. The Environmental Group | Aeris Environmental vs. Hawsons Iron |
| British Amer vs. Energy Resources | British Amer vs. 88 Energy | British Amer vs. Amani Gold | British Amer vs. A1 Investments Resources |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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