Correlation Between CAE and Ammo Preferred
Can any of the company-specific risk be diversified away by investing in both CAE and Ammo Preferred 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 CAE and Ammo Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAE Inc and Ammo Preferred, you can compare the effects of market volatilities on CAE and Ammo Preferred 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 CAE with a short position of Ammo Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAE and Ammo Preferred.
Diversification Opportunities for CAE and Ammo Preferred
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CAE and Ammo is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CAE Inc and Ammo Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ammo Preferred and CAE 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 CAE Inc are associated (or correlated) with Ammo Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ammo Preferred has no effect on the direction of CAE i.e., CAE and Ammo Preferred go up and down completely randomly.
Pair Corralation between CAE and Ammo Preferred
Considering the 90-day investment horizon CAE Inc is expected to generate 0.7 times more return on investment than Ammo Preferred. However, CAE Inc is 1.42 times less risky than Ammo Preferred. It trades about 0.35 of its potential returns per unit of risk. Ammo Preferred is currently generating about 0.01 per unit of risk. If you would invest 1,835 in CAE Inc on August 25, 2024 and sell it today you would earn a total of 455.00 from holding CAE Inc or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAE Inc vs. Ammo Preferred
Performance |
| Timeline |
| CAE Inc |
| Ammo Preferred |
CAE and Ammo Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAE and Ammo Preferred
The main advantage of trading using opposite CAE and Ammo Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAE position performs unexpectedly, Ammo Preferred 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 Ammo Preferred will offset losses from the drop in Ammo Preferred's long position.The idea behind CAE Inc and Ammo Preferred pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ammo Preferred vs. Ammo Inc | Ammo Preferred vs. XOMA Corporation | Ammo Preferred vs. Presidio Property Trust | Ammo Preferred vs. XOMA Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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