Correlation Between Aeye and Precision Drilling
Can any of the company-specific risk be diversified away by investing in both Aeye and Precision Drilling 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 Precision Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeye Inc and Precision Drilling, you can compare the effects of market volatilities on Aeye and Precision Drilling 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 Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Precision Drilling.
Diversification Opportunities for Aeye and Precision Drilling
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aeye and Precision is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling 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 Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Aeye i.e., Aeye and Precision Drilling go up and down completely randomly.
Pair Corralation between Aeye and Precision Drilling
Given the investment horizon of 90 days Aeye Inc is expected to under-perform the Precision Drilling. In addition to that, Aeye is 1.94 times more volatile than Precision Drilling. It trades about -0.07 of its total potential returns per unit of risk. Precision Drilling is currently generating about 0.11 per unit of volatility. If you would invest 5,792 in Precision Drilling on August 29, 2024 and sell it today you would earn a total of 368.00 from holding Precision Drilling or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeye Inc vs. Precision Drilling
Performance |
| Timeline |
| Aeye Inc |
| Precision Drilling |
Aeye and Precision Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeye and Precision Drilling
The main advantage of trading using opposite Aeye and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye position performs unexpectedly, Precision Drilling 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 Precision Drilling will offset losses from the drop in Precision Drilling's long position.| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Hesai Group American | Aeye vs. Mobileye Global Class |
| Precision Drilling vs. Helmerich and Payne | Precision Drilling vs. Nabors Industries | Precision Drilling vs. Seadrill Limited | Precision Drilling vs. Patterson UTI Energy |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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