Correlation Between AES Corp and EON SE
Can any of the company-specific risk be diversified away by investing in both AES Corp and EON SE 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 Corp and EON SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AES Corp Unit and EON SE ADR, you can compare the effects of market volatilities on AES Corp and EON SE 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 Corp with a short position of EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES Corp and EON SE.
Diversification Opportunities for AES Corp and EON SE
Significant diversification
The 3 months correlation between AES and EON is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp Unit and EON SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE ADR and AES Corp 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 AES Corp Unit are associated (or correlated) with EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE ADR has no effect on the direction of AES Corp i.e., AES Corp and EON SE go up and down completely randomly.
Pair Corralation between AES Corp and EON SE
If you would invest 1,060 in EON SE ADR on August 24, 2024 and sell it today you would earn a total of 0.00 from holding EON SE ADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AES Corp Unit vs. EON SE ADR
Performance |
| Timeline |
| AES Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| EON SE ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AES Corp and EON SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AES Corp and EON SE
The main advantage of trading using opposite AES Corp and EON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES Corp position performs unexpectedly, EON SE 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 EON SE will offset losses from the drop in EON SE's long position.| AES Corp vs. The Cheesecake Factory | AES Corp vs. Dave Busters Entertainment | AES Corp vs. Omni Health | AES Corp vs. Amgen Inc |
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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