Correlation Between Aeye and Loews Corp
Can any of the company-specific risk be diversified away by investing in both Aeye and Loews 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 Aeye and Loews Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeye Inc and Loews Corp, you can compare the effects of market volatilities on Aeye and Loews 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 Aeye with a short position of Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Loews Corp.
Diversification Opportunities for Aeye and Loews Corp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aeye and Loews is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Aeye i.e., Aeye and Loews Corp go up and down completely randomly.
Pair Corralation between Aeye and Loews Corp
Given the investment horizon of 90 days Aeye Inc is expected to generate 9.74 times more return on investment than Loews Corp. However, Aeye is 9.74 times more volatile than Loews Corp. It trades about 0.04 of its potential returns per unit of risk. Loews Corp is currently generating about 0.17 per unit of risk. If you would invest 115.00 in Aeye Inc on September 12, 2024 and sell it today you would earn a total of 1.20 from holding Aeye Inc or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aeye Inc vs. Loews Corp
Performance |
| Timeline |
| Aeye Inc |
| Loews Corp |
Aeye and Loews Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeye and Loews Corp
The main advantage of trading using opposite Aeye and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye position performs unexpectedly, Loews 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 Loews Corp will offset losses from the drop in Loews Corp's long position.The idea behind Aeye Inc and Loews Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Loews Corp vs. Aeye Inc | Loews Corp vs. Ep Emerging Markets | Loews Corp vs. LiCycle Holdings Corp | Loews Corp vs. SEI Investments |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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