Correlation Between Mene and AirIQ
Can any of the company-specific risk be diversified away by investing in both Mene and AirIQ 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 Mene and AirIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mene Inc and AirIQ Inc, you can compare the effects of market volatilities on Mene and AirIQ 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 Mene with a short position of AirIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mene and AirIQ.
Diversification Opportunities for Mene and AirIQ
Good diversification
The 3 months correlation between Mene and AirIQ is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mene Inc and AirIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirIQ Inc and Mene 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 Mene Inc are associated (or correlated) with AirIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirIQ Inc has no effect on the direction of Mene i.e., Mene and AirIQ go up and down completely randomly.
Pair Corralation between Mene and AirIQ
Assuming the 90 days trading horizon Mene Inc is expected to under-perform the AirIQ. In addition to that, Mene is 1.38 times more volatile than AirIQ Inc. It trades about -0.01 of its total potential returns per unit of risk. AirIQ Inc is currently generating about 0.04 per unit of volatility. If you would invest 27.00 in AirIQ Inc on September 2, 2024 and sell it today you would earn a total of 13.00 from holding AirIQ Inc or generate 48.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Mene Inc vs. AirIQ Inc
Performance |
| Timeline |
| Mene Inc |
| AirIQ Inc |
Mene and AirIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mene and AirIQ
The main advantage of trading using opposite Mene and AirIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mene position performs unexpectedly, AirIQ 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 AirIQ will offset losses from the drop in AirIQ's long position.The idea behind Mene Inc and AirIQ Inc 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.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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