Correlation Between American Equity and AIA Group
Can any of the company-specific risk be diversified away by investing in both American Equity and AIA Group 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 Equity and AIA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Equity Investment and AIA Group, you can compare the effects of market volatilities on American Equity and AIA Group 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 Equity with a short position of AIA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Equity and AIA Group.
Diversification Opportunities for American Equity and AIA Group
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and AIA is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding American Equity Investment and AIA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIA Group and American Equity 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 Equity Investment are associated (or correlated) with AIA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIA Group has no effect on the direction of American Equity i.e., American Equity and AIA Group go up and down completely randomly.
Pair Corralation between American Equity and AIA Group
If you would invest 5,375 in American Equity Investment on August 24, 2024 and sell it today you would earn a total of 0.00 from holding American Equity Investment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
American Equity Investment vs. AIA Group
Performance |
| Timeline |
| American Equity Inve |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AIA Group |
American Equity and AIA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Equity and AIA Group
The main advantage of trading using opposite American Equity and AIA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Equity position performs unexpectedly, AIA Group 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 AIA Group will offset losses from the drop in AIA Group's long position.| American Equity vs. MetLife Preferred Stock | American Equity vs. Prudential Public Limited | American Equity vs. MetLife Preferred Stock | American Equity vs. Jackson Financial |
| AIA Group vs. Ping An Insurance | AIA Group vs. AIA Group Ltd | AIA Group vs. CNO Financial Group | AIA Group vs. MetLife Preferred Stock |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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