Correlation Between MTI Wireless and AES Corp
Can any of the company-specific risk be diversified away by investing in both MTI Wireless 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 MTI Wireless and AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTI Wireless Edge and AES Corp, you can compare the effects of market volatilities on MTI Wireless 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 MTI Wireless with a short position of AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI Wireless and AES Corp.
Diversification Opportunities for MTI Wireless and AES Corp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MTI and AES is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MTI Wireless Edge and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp and MTI Wireless 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 MTI Wireless Edge 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 MTI Wireless i.e., MTI Wireless and AES Corp go up and down completely randomly.
Pair Corralation between MTI Wireless and AES Corp
Assuming the 90 days trading horizon MTI Wireless Edge is expected to generate 0.97 times more return on investment than AES Corp. However, MTI Wireless Edge is 1.03 times less risky than AES Corp. It trades about 0.08 of its potential returns per unit of risk. AES Corp is currently generating about -0.04 per unit of risk. If you would invest 2,904 in MTI Wireless Edge on September 4, 2024 and sell it today you would earn a total of 1,496 from holding MTI Wireless Edge or generate 51.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI Wireless Edge vs. AES Corp
Performance |
| Timeline |
| MTI Wireless Edge |
| AES Corp |
MTI Wireless and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI Wireless and AES Corp
The main advantage of trading using opposite MTI Wireless and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI Wireless 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.| MTI Wireless vs. Berkshire Hathaway | MTI Wireless vs. Hyundai Motor | MTI Wireless vs. Samsung Electronics Co | MTI Wireless vs. Samsung Electronics Co |
| AES Corp vs. Various Eateries PLC | AES Corp vs. Jacquet Metal Service | AES Corp vs. Panther Metals PLC | AES Corp vs. Wheaton Precious Metals |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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