Correlation Between Step One and Aeris Environmental
Can any of the company-specific risk be diversified away by investing in both Step One and Aeris Environmental 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 Step One and Aeris Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Step One Clothing and Aeris Environmental, you can compare the effects of market volatilities on Step One and Aeris Environmental 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 Step One with a short position of Aeris Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Step One and Aeris Environmental.
Diversification Opportunities for Step One and Aeris Environmental
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Step and Aeris is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Step One Clothing and Aeris Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Environmental and Step One 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 Step One Clothing are associated (or correlated) with Aeris Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Environmental has no effect on the direction of Step One i.e., Step One and Aeris Environmental go up and down completely randomly.
Pair Corralation between Step One and Aeris Environmental
Assuming the 90 days trading horizon Step One Clothing is expected to generate 0.71 times more return on investment than Aeris Environmental. However, Step One Clothing is 1.41 times less risky than Aeris Environmental. It trades about 0.03 of its potential returns per unit of risk. Aeris Environmental is currently generating about -0.07 per unit of risk. If you would invest 126.00 in Step One Clothing on October 20, 2024 and sell it today you would earn a total of 1.00 from holding Step One Clothing or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Step One Clothing vs. Aeris Environmental
Performance |
| Timeline |
| Step One Clothing |
| Aeris Environmental |
Step One and Aeris Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Step One and Aeris Environmental
The main advantage of trading using opposite Step One and Aeris Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Step One position performs unexpectedly, Aeris Environmental 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 Aeris Environmental will offset losses from the drop in Aeris Environmental's long position.| Step One vs. Neurotech International | Step One vs. Thorney Technologies | Step One vs. Mach7 Technologies | Step One vs. Dug Technology |
| Aeris Environmental vs. Centrex Metals | Aeris Environmental vs. Everest Metals | Aeris Environmental vs. Step One Clothing | Aeris Environmental vs. Centaurus 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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