Correlation Between AECOM TECHNOLOGY and Encavis AG
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and Encavis AG 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 AECOM TECHNOLOGY and Encavis AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Encavis AG, you can compare the effects of market volatilities on AECOM TECHNOLOGY and Encavis AG 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 AECOM TECHNOLOGY with a short position of Encavis AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Encavis AG.
Diversification Opportunities for AECOM TECHNOLOGY and Encavis AG
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AECOM and Encavis is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and Encavis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encavis AG and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with Encavis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encavis AG has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Encavis AG go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Encavis AG
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.65 times more return on investment than Encavis AG. However, AECOM TECHNOLOGY is 1.53 times less risky than Encavis AG. It trades about 0.05 of its potential returns per unit of risk. Encavis AG is currently generating about 0.0 per unit of risk. If you would invest 7,796 in AECOM TECHNOLOGY on September 12, 2024 and sell it today you would earn a total of 2,804 from holding AECOM TECHNOLOGY or generate 35.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Encavis AG
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Encavis AG |
AECOM TECHNOLOGY and Encavis AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Encavis AG
The main advantage of trading using opposite AECOM TECHNOLOGY and Encavis AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY position performs unexpectedly, Encavis AG 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 Encavis AG will offset losses from the drop in Encavis AG's long position.| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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