Correlation Between JLEN Environmental and AES Corp
Can any of the company-specific risk be diversified away by investing in both JLEN Environmental and AES Corp 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 JLEN Environmental and AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JLEN Environmental Assets and AES Corp, you can compare the effects of market volatilities on JLEN Environmental and AES Corp 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 JLEN Environmental with a short position of AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLEN Environmental and AES Corp.
Diversification Opportunities for JLEN Environmental and AES Corp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JLEN and AES is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp and JLEN Environmental 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 JLEN Environmental Assets are associated (or correlated) with AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp has no effect on the direction of JLEN Environmental i.e., JLEN Environmental and AES Corp go up and down completely randomly.
Pair Corralation between JLEN Environmental and AES Corp
Assuming the 90 days trading horizon JLEN Environmental Assets is expected to generate 0.75 times more return on investment than AES Corp. However, JLEN Environmental Assets is 1.33 times less risky than AES Corp. It trades about -0.25 of its potential returns per unit of risk. AES Corp is currently generating about -0.23 per unit of risk. If you would invest 8,540 in JLEN Environmental Assets on September 5, 2024 and sell it today you would lose (870.00) from holding JLEN Environmental Assets or give up 10.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
JLEN Environmental Assets vs. AES Corp
Performance |
| Timeline |
| JLEN Environmental Assets |
| AES Corp |
JLEN Environmental and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JLEN Environmental and AES Corp
The main advantage of trading using opposite JLEN Environmental and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLEN Environmental position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.| JLEN Environmental vs. Discover Financial Services | JLEN Environmental vs. Central Asia Metals | JLEN Environmental vs. Summit Materials Cl | JLEN Environmental vs. St Galler Kantonalbank |
| AES Corp vs. Blackrock World Mining | AES Corp vs. JLEN Environmental Assets | AES Corp vs. Greenroc Mining PLC | AES Corp vs. Ironveld Plc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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