Correlation Between IES Holdings and Aecon
Can any of the company-specific risk be diversified away by investing in both IES Holdings and Aecon 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 IES Holdings and Aecon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IES Holdings and Aecon Group, you can compare the effects of market volatilities on IES Holdings and Aecon 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 IES Holdings with a short position of Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of IES Holdings and Aecon.
Diversification Opportunities for IES Holdings and Aecon
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IES and Aecon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and IES Holdings 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 IES Holdings are associated (or correlated) with Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of IES Holdings i.e., IES Holdings and Aecon go up and down completely randomly.
Pair Corralation between IES Holdings and Aecon
Given the investment horizon of 90 days IES Holdings is expected to under-perform the Aecon. In addition to that, IES Holdings is 2.49 times more volatile than Aecon Group. It trades about -0.26 of its total potential returns per unit of risk. Aecon Group is currently generating about -0.23 per unit of volatility. If you would invest 1,717 in Aecon Group on December 1, 2024 and sell it today you would lose (137.00) from holding Aecon Group or give up 7.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IES Holdings vs. Aecon Group
Performance |
| Timeline |
| IES Holdings |
| Aecon Group |
IES Holdings and Aecon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IES Holdings and Aecon
The main advantage of trading using opposite IES Holdings and Aecon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IES Holdings position performs unexpectedly, Aecon 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 Aecon will offset losses from the drop in Aecon's long position.| IES Holdings vs. EMCOR Group | IES Holdings vs. Comfort Systems USA | IES Holdings vs. Primoris Services | IES Holdings vs. Granite Construction Incorporated |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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