Correlation Between Johnson Electric and Aeye
Can any of the company-specific risk be diversified away by investing in both Johnson Electric and Aeye 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 Johnson Electric and Aeye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Electric Holdings and Aeye Inc, you can compare the effects of market volatilities on Johnson Electric and Aeye 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 Johnson Electric with a short position of Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Electric and Aeye.
Diversification Opportunities for Johnson Electric and Aeye
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Johnson and Aeye is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Electric Holdings and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc and Johnson Electric 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 Johnson Electric Holdings are associated (or correlated) with Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Johnson Electric i.e., Johnson Electric and Aeye go up and down completely randomly.
Pair Corralation between Johnson Electric and Aeye
Assuming the 90 days horizon Johnson Electric Holdings is expected to generate 0.36 times more return on investment than Aeye. However, Johnson Electric Holdings is 2.8 times less risky than Aeye. It trades about 0.05 of its potential returns per unit of risk. Aeye Inc is currently generating about -0.01 per unit of risk. If you would invest 93.00 in Johnson Electric Holdings on September 12, 2024 and sell it today you would earn a total of 47.00 from holding Johnson Electric Holdings or generate 50.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 67.27% |
| Values | Daily Returns |
Johnson Electric Holdings vs. Aeye Inc
Performance |
| Timeline |
| Johnson Electric Holdings |
| Aeye Inc |
Johnson Electric and Aeye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Electric and Aeye
The main advantage of trading using opposite Johnson Electric and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Electric position performs unexpectedly, Aeye 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 Aeye will offset losses from the drop in Aeye's long position.| Johnson Electric vs. Aeye Inc | Johnson Electric vs. ECARX Holdings Class | Johnson Electric vs. SES AI Corp | Johnson Electric vs. Hyliion Holdings Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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