Correlation Between AES and Atco
Can any of the company-specific risk be diversified away by investing in both AES and Atco 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 AES and Atco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The AES and Atco, you can compare the effects of market volatilities on AES and Atco 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 AES with a short position of Atco. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Atco.
Diversification Opportunities for AES and Atco
Average diversification
The 3 months correlation between AES and Atco is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Atco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco and AES 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 The AES are associated (or correlated) with Atco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco has no effect on the direction of AES i.e., AES and Atco go up and down completely randomly.
Pair Corralation between AES and Atco
Considering the 90-day investment horizon The AES is expected to under-perform the Atco. In addition to that, AES is 2.13 times more volatile than Atco. It trades about -0.02 of its total potential returns per unit of risk. Atco is currently generating about 0.11 per unit of volatility. If you would invest 2,609 in Atco on August 24, 2024 and sell it today you would earn a total of 913.00 from holding Atco or generate 34.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
The AES vs. Atco
Performance |
| Timeline |
| AES |
| Atco |
AES and Atco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AES and Atco
The main advantage of trading using opposite AES and Atco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES position performs unexpectedly, Atco 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 Atco will offset losses from the drop in Atco's long position.The idea behind The AES and Atco 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.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| CEOs Directory Screen CEOs from public companies around the world |