Correlation Between Aeye and Holley
Can any of the company-specific risk be diversified away by investing in both Aeye and Holley 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 Aeye and Holley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeye Inc and Holley Inc, you can compare the effects of market volatilities on Aeye and Holley 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 Aeye with a short position of Holley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Holley.
Diversification Opportunities for Aeye and Holley
Average diversification
The 3 months correlation between Aeye and Holley is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Holley Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holley Inc and Aeye 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 Aeye Inc are associated (or correlated) with Holley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holley Inc has no effect on the direction of Aeye i.e., Aeye and Holley go up and down completely randomly.
Pair Corralation between Aeye and Holley
Given the investment horizon of 90 days Aeye Inc is expected to generate 2.58 times more return on investment than Holley. However, Aeye is 2.58 times more volatile than Holley Inc. It trades about 0.25 of its potential returns per unit of risk. Holley Inc is currently generating about 0.13 per unit of risk. If you would invest 95.00 in Aeye Inc on September 18, 2024 and sell it today you would earn a total of 35.00 from holding Aeye Inc or generate 36.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Aeye Inc vs. Holley Inc
Performance |
Timeline |
Aeye Inc |
Holley Inc |
Aeye and Holley Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aeye and Holley
The main advantage of trading using opposite Aeye and Holley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye position performs unexpectedly, Holley 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 Holley will offset losses from the drop in Holley's long position.Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Quantumscape Corp | Aeye vs. Hyliion Holdings Corp |
Holley vs. Dorman Products | Holley vs. Monro Muffler Brake | Holley vs. Standard Motor Products | Holley vs. Stoneridge |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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