Correlation Between Playtech Plc and AES Corp
Can any of the company-specific risk be diversified away by investing in both Playtech Plc 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 Playtech Plc and AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech Plc and AES Corp, you can compare the effects of market volatilities on Playtech Plc 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 Playtech Plc with a short position of AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and AES Corp.
Diversification Opportunities for Playtech Plc and AES Corp
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Playtech and AES is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Playtech Plc and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp and Playtech Plc 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 Playtech Plc 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 Playtech Plc i.e., Playtech Plc and AES Corp go up and down completely randomly.
Pair Corralation between Playtech Plc and AES Corp
Assuming the 90 days trading horizon Playtech Plc is expected to generate 0.48 times more return on investment than AES Corp. However, Playtech Plc is 2.09 times less risky than AES Corp. It trades about 0.09 of its potential returns per unit of risk. AES Corp is currently generating about 0.03 per unit of risk. If you would invest 72,500 in Playtech Plc on September 14, 2024 and sell it today you would earn a total of 1,500 from holding Playtech Plc or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtech Plc vs. AES Corp
Performance |
| Timeline |
| Playtech Plc |
| AES Corp |
Playtech Plc and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and AES Corp
The main advantage of trading using opposite Playtech Plc and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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.| Playtech Plc vs. Kinnevik Investment AB | Playtech Plc vs. Oakley Capital Investments | Playtech Plc vs. FC Investment Trust | Playtech Plc vs. United Utilities Group |
| AES Corp vs. Playtech Plc | AES Corp vs. Wyndham Hotels Resorts | AES Corp vs. Medical Properties Trust | AES Corp vs. Melia Hotels |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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