Correlation Between Ducommun Incorporated and 00108WAF7

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Can any of the company-specific risk be diversified away by investing in both Ducommun Incorporated and 00108WAF7 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 Ducommun Incorporated and 00108WAF7 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ducommun Incorporated and AEP TEX INC, you can compare the effects of market volatilities on Ducommun Incorporated and 00108WAF7 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 Ducommun Incorporated with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ducommun Incorporated and 00108WAF7.

Diversification Opportunities for Ducommun Incorporated and 00108WAF7

Ducommun00108WAF7Diversified AwayDucommun00108WAF7Diversified Away100%
-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ducommun and 00108WAF7 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ducommun Incorporated and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC and Ducommun Incorporated 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 Ducommun Incorporated are associated (or correlated) with 00108WAF7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of Ducommun Incorporated i.e., Ducommun Incorporated and 00108WAF7 go up and down completely randomly.

Pair Corralation between Ducommun Incorporated and 00108WAF7

Considering the 90-day investment horizon Ducommun Incorporated is expected to under-perform the 00108WAF7. In addition to that, Ducommun Incorporated is 1.26 times more volatile than AEP TEX INC. It trades about -0.49 of its total potential returns per unit of risk. AEP TEX INC is currently generating about 0.25 per unit of volatility. If you would invest  7,206  in AEP TEX INC on November 25, 2024 and sell it today you would earn a total of  333.00  from holding AEP TEX INC or generate 4.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy90.48%
ValuesDaily Returns

Ducommun Incorporated  vs.  AEP TEX INC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-8-6-4-202
JavaScript chart by amCharts 3.21.15DCO 00108WAF7
       Timeline  
Ducommun Incorporated 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ducommun Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb606264666870
AEP TEX INC 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.1528249023717273747576

Ducommun Incorporated and 00108WAF7 Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.22-2.41-1.6-0.79-0.01350.731.482.232.983.74 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15DCO 00108WAF7
       Returns  

Pair Trading with Ducommun Incorporated and 00108WAF7

The main advantage of trading using opposite Ducommun Incorporated and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ducommun Incorporated position performs unexpectedly, 00108WAF7 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 00108WAF7 will offset losses from the drop in 00108WAF7's long position.
The idea behind Ducommun Incorporated and AEP TEX INC 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.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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