Correlation Between Aspen Aerogels and AAON
Can any of the company-specific risk be diversified away by investing in both Aspen Aerogels and AAON 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 Aspen Aerogels and AAON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Aerogels and AAON Inc, you can compare the effects of market volatilities on Aspen Aerogels and AAON 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 Aspen Aerogels with a short position of AAON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Aerogels and AAON.
Diversification Opportunities for Aspen Aerogels and AAON
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aspen and AAON is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Aerogels and AAON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAON Inc and Aspen Aerogels 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 Aspen Aerogels are associated (or correlated) with AAON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAON Inc has no effect on the direction of Aspen Aerogels i.e., Aspen Aerogels and AAON go up and down completely randomly.
Pair Corralation between Aspen Aerogels and AAON
Given the investment horizon of 90 days Aspen Aerogels is expected to under-perform the AAON. But the stock apears to be less risky and, when comparing its historical volatility, Aspen Aerogels is 1.31 times less risky than AAON. The stock trades about -0.45 of its potential returns per unit of risk. The AAON Inc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 10,689 in AAON Inc on August 24, 2024 and sell it today you would earn a total of 2,867 from holding AAON Inc or generate 26.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Aerogels vs. AAON Inc
Performance |
| Timeline |
| Aspen Aerogels |
| AAON Inc |
Aspen Aerogels and AAON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Aerogels and AAON
The main advantage of trading using opposite Aspen Aerogels and AAON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Aerogels position performs unexpectedly, AAON 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 AAON will offset losses from the drop in AAON's long position.| Aspen Aerogels vs. Apyx Medical | Aspen Aerogels vs. Century Communities | Aspen Aerogels vs. Ardmore Shpng | Aspen Aerogels vs. American Assets Trust |
| AAON vs. Quanex Building Products | AAON vs. Gibraltar Industries | AAON vs. Armstrong World Industries | AAON vs. Beacon Roofing Supply |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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