Correlation Between NYSE Composite and AEye
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and AEye 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 NYSE Composite and AEye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and AEye Inc, you can compare the effects of market volatilities on NYSE Composite and AEye 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 NYSE Composite with a short position of AEye. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and AEye.
Diversification Opportunities for NYSE Composite and AEye
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and AEye is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and AEye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEye Inc and NYSE Composite 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 NYSE Composite are associated (or correlated) with AEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEye Inc has no effect on the direction of NYSE Composite i.e., NYSE Composite and AEye go up and down completely randomly.
Pair Corralation between NYSE Composite and AEye
Assuming the 90 days trading horizon NYSE Composite is expected to generate 19.51 times less return on investment than AEye. But when comparing it to its historical volatility, NYSE Composite is 33.33 times less risky than AEye. It trades about 0.24 of its potential returns per unit of risk. AEye Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1.20 in AEye Inc on August 29, 2024 and sell it today you would earn a total of 0.30 from holding AEye Inc or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. AEye Inc
Performance |
| Timeline |
NYSE Composite and AEye Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
AEye Inc
Pair trading matchups for AEye
Pair Trading with NYSE Composite and AEye
The main advantage of trading using opposite NYSE Composite and AEye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, AEye 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 AEye will offset losses from the drop in AEye's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| AEye vs. Faraday Future Intelligent | AEye vs. Innoviz Technologies | AEye vs. Aeye Inc | AEye vs. Xos Equity Warrants |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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