Correlation Between AECOM TECHNOLOGY and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and THRACE PLASTICS 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 THRACE PLASTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and THRACE PLASTICS, you can compare the effects of market volatilities on AECOM TECHNOLOGY and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and THRACE PLASTICS.
Diversification Opportunities for AECOM TECHNOLOGY and THRACE PLASTICS
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AECOM and THRACE is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and THRACE PLASTICS
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.88 times more return on investment than THRACE PLASTICS. However, AECOM TECHNOLOGY is 1.13 times less risky than THRACE PLASTICS. It trades about 0.04 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.01 per unit of risk. If you would invest 8,088 in AECOM TECHNOLOGY on October 16, 2024 and sell it today you would earn a total of 2,212 from holding AECOM TECHNOLOGY or generate 27.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. THRACE PLASTICS
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| THRACE PLASTICS |
AECOM TECHNOLOGY and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and THRACE PLASTICS
The main advantage of trading using opposite AECOM TECHNOLOGY and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| AECOM TECHNOLOGY vs. Sun Life Financial | AECOM TECHNOLOGY vs. BOS BETTER ONLINE | AECOM TECHNOLOGY vs. JSC Halyk bank | AECOM TECHNOLOGY vs. Cincinnati Financial Corp |
| THRACE PLASTICS vs. Coor Service Management | THRACE PLASTICS vs. AECOM TECHNOLOGY | THRACE PLASTICS vs. Motorcar Parts of | THRACE PLASTICS vs. Take Two Interactive Software |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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