Correlation Between AES Corp and Timken
Can any of the company-specific risk be diversified away by investing in both AES Corp and Timken 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 Timken 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 Timken Company, you can compare the effects of market volatilities on AES Corp and Timken 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 Timken. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES Corp and Timken.
Diversification Opportunities for AES Corp and Timken
Very good diversification
The 3 months correlation between AES and Timken is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp Unit and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company 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 Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of AES Corp i.e., AES Corp and Timken go up and down completely randomly.
Pair Corralation between AES Corp and Timken
If you would invest 7,320 in Timken Company on September 4, 2024 and sell it today you would earn a total of 442.00 from holding Timken Company or generate 6.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 0.4% |
Values | Daily Returns |
AES Corp Unit vs. Timken Company
Performance |
Timeline |
AES Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Timken Company |
AES Corp and Timken Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AES Corp and Timken
The main advantage of trading using opposite AES Corp and Timken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES Corp position performs unexpectedly, Timken 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 Timken will offset losses from the drop in Timken's long position.AES Corp vs. Timken Company | AES Corp vs. Siriuspoint | AES Corp vs. Sun Life Financial | AES Corp vs. World Houseware Limited |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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