Correlation Between AEON STORES and Brother Industries
Can any of the company-specific risk be diversified away by investing in both AEON STORES and Brother Industries 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 AEON STORES and Brother Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEON STORES and Brother Industries, you can compare the effects of market volatilities on AEON STORES and Brother Industries 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 AEON STORES with a short position of Brother Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and Brother Industries.
Diversification Opportunities for AEON STORES and Brother Industries
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AEON and Brother is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and Brother Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brother Industries and AEON STORES 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 AEON STORES are associated (or correlated) with Brother Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brother Industries has no effect on the direction of AEON STORES i.e., AEON STORES and Brother Industries go up and down completely randomly.
Pair Corralation between AEON STORES and Brother Industries
Assuming the 90 days trading horizon AEON STORES is expected to generate 0.66 times more return on investment than Brother Industries. However, AEON STORES is 1.51 times less risky than Brother Industries. It trades about 0.24 of its potential returns per unit of risk. Brother Industries is currently generating about -0.13 per unit of risk. If you would invest 5.65 in AEON STORES on October 25, 2024 and sell it today you would earn a total of 0.25 from holding AEON STORES or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEON STORES vs. Brother Industries
Performance |
| Timeline |
| AEON STORES |
| Brother Industries |
AEON STORES and Brother Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEON STORES and Brother Industries
The main advantage of trading using opposite AEON STORES and Brother Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES position performs unexpectedly, Brother Industries 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 Brother Industries will offset losses from the drop in Brother Industries' long position.| AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc |
| Brother Industries vs. WESANA HEALTH HOLD | Brother Industries vs. PURETECH HEALTH PLC | Brother Industries vs. Planet Fitness | Brother Industries vs. Synchrony Financial |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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