Correlation Between Amaero International and Spirax-Sarco Engineering
Can any of the company-specific risk be diversified away by investing in both Amaero International and Spirax-Sarco Engineering 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 Amaero International and Spirax-Sarco Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amaero International and Spirax Sarco Engineering PLC, you can compare the effects of market volatilities on Amaero International and Spirax-Sarco Engineering 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 Amaero International with a short position of Spirax-Sarco Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amaero International and Spirax-Sarco Engineering.
Diversification Opportunities for Amaero International and Spirax-Sarco Engineering
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amaero and Spirax-Sarco is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Amaero International and Spirax Sarco Engineering PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirax-Sarco Engineering and Amaero International 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 Amaero International are associated (or correlated) with Spirax-Sarco Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirax-Sarco Engineering has no effect on the direction of Amaero International i.e., Amaero International and Spirax-Sarco Engineering go up and down completely randomly.
Pair Corralation between Amaero International and Spirax-Sarco Engineering
Assuming the 90 days horizon Amaero International is expected to under-perform the Spirax-Sarco Engineering. But the pink sheet apears to be less risky and, when comparing its historical volatility, Amaero International is 2.52 times less risky than Spirax-Sarco Engineering. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Spirax Sarco Engineering PLC is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 4,474 in Spirax Sarco Engineering PLC on August 29, 2024 and sell it today you would lose (105.00) from holding Spirax Sarco Engineering PLC or give up 2.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Amaero International vs. Spirax Sarco Engineering PLC
Performance |
| Timeline |
| Amaero International |
| Spirax-Sarco Engineering |
Amaero International and Spirax-Sarco Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amaero International and Spirax-Sarco Engineering
The main advantage of trading using opposite Amaero International and Spirax-Sarco Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amaero International position performs unexpectedly, Spirax-Sarco Engineering 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 Spirax-Sarco Engineering will offset losses from the drop in Spirax-Sarco Engineering's long position.| Amaero International vs. Parker Hannifin | Amaero International vs. Eaton PLC | Amaero International vs. Dover | Amaero International vs. Illinois Tool Works |
| Spirax-Sarco Engineering vs. Atlas Copco AB | Spirax-Sarco Engineering vs. Aumann AG | Spirax-Sarco Engineering vs. Amaero International | Spirax-Sarco Engineering vs. Arista Power |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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