Correlation Between Telesat Corp and AAP
Can any of the company-specific risk be diversified away by investing in both Telesat Corp and AAP 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 Telesat Corp and AAP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telesat Corp and AAP Inc, you can compare the effects of market volatilities on Telesat Corp and AAP 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 Telesat Corp with a short position of AAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telesat Corp and AAP.
Diversification Opportunities for Telesat Corp and AAP
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telesat and AAP is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Telesat Corp and AAP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAP Inc and Telesat Corp 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 Telesat Corp are associated (or correlated) with AAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAP Inc has no effect on the direction of Telesat Corp i.e., Telesat Corp and AAP go up and down completely randomly.
Pair Corralation between Telesat Corp and AAP
Given the investment horizon of 90 days Telesat Corp is expected to generate 9.64 times less return on investment than AAP. But when comparing it to its historical volatility, Telesat Corp is 5.4 times less risky than AAP. It trades about 0.05 of its potential returns per unit of risk. AAP Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.50 in AAP Inc on October 23, 2024 and sell it today you would lose (0.49) from holding AAP Inc or give up 98.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Telesat Corp vs. AAP Inc
Performance |
| Timeline |
| Telesat Corp |
| AAP Inc |
Telesat Corp and AAP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telesat Corp and AAP
The main advantage of trading using opposite Telesat Corp and AAP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telesat Corp position performs unexpectedly, AAP 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 AAP will offset losses from the drop in AAP's long position.| Telesat Corp vs. KVH Industries | Telesat Corp vs. Comtech Telecommunications Corp | Telesat Corp vs. Knowles Cor | Telesat Corp vs. Ituran Location and |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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