Correlation Between Aeon Ventures and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Aeon Ventures and Freedom Bank 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 Ventures and Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeon Ventures and Freedom Bank of, you can compare the effects of market volatilities on Aeon Ventures and Freedom Bank 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 Ventures with a short position of Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeon Ventures and Freedom Bank.
Diversification Opportunities for Aeon Ventures and Freedom Bank
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aeon and Freedom is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Ventures and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and Aeon Ventures 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 Ventures are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Aeon Ventures i.e., Aeon Ventures and Freedom Bank go up and down completely randomly.
Pair Corralation between Aeon Ventures and Freedom Bank
Given the investment horizon of 90 days Aeon Ventures is expected to under-perform the Freedom Bank. In addition to that, Aeon Ventures is 10.02 times more volatile than Freedom Bank of. It trades about -0.05 of its total potential returns per unit of risk. Freedom Bank of is currently generating about 0.15 per unit of volatility. If you would invest 1,074 in Freedom Bank of on September 12, 2024 and sell it today you would earn a total of 27.00 from holding Freedom Bank of or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aeon Ventures vs. Freedom Bank of
Performance |
| Timeline |
| Aeon Ventures |
| Freedom Bank |
Aeon Ventures and Freedom Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeon Ventures and Freedom Bank
The main advantage of trading using opposite Aeon Ventures and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeon Ventures position performs unexpectedly, Freedom Bank 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.| Aeon Ventures vs. Freedom Bank of | Aeon Ventures vs. HUMANA INC | Aeon Ventures vs. Barloworld Ltd ADR | Aeon Ventures vs. Morningstar Unconstrained Allocation |
| Freedom Bank vs. HUMANA INC | Freedom Bank vs. Barloworld Ltd ADR | Freedom Bank vs. Morningstar Unconstrained Allocation | Freedom Bank vs. Thrivent High Yield |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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