Correlation Between 00108WAF7 and 207597EH4
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By analyzing existing cross correlation between AEP TEX INC and CONNECTICUT LT PWR, you can compare the effects of market volatilities on 00108WAF7 and 207597EH4 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 00108WAF7 with a short position of 207597EH4. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and 207597EH4.
Diversification Opportunities for 00108WAF7 and 207597EH4
Good diversification
The 3 months correlation between 00108WAF7 and 207597EH4 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and CONNECTICUT LT PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONNECTICUT LT PWR and 00108WAF7 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 AEP TEX INC are associated (or correlated) with 207597EH4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONNECTICUT LT PWR has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and 207597EH4 go up and down completely randomly.
Pair Corralation between 00108WAF7 and 207597EH4
Assuming the 90 days trading horizon AEP TEX INC is expected to generate 65.61 times more return on investment than 207597EH4. However, 00108WAF7 is 65.61 times more volatile than CONNECTICUT LT PWR. It trades about 0.09 of its potential returns per unit of risk. CONNECTICUT LT PWR is currently generating about 0.01 per unit of risk. If you would invest 7,210 in AEP TEX INC on September 1, 2024 and sell it today you would lose (121.00) from holding AEP TEX INC or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 57.3% |
| Values | Daily Returns |
AEP TEX INC vs. CONNECTICUT LT PWR
Performance |
| Timeline |
| AEP TEX INC |
| CONNECTICUT LT PWR |
00108WAF7 and 207597EH4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 00108WAF7 and 207597EH4
The main advantage of trading using opposite 00108WAF7 and 207597EH4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, 207597EH4 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 207597EH4 will offset losses from the drop in 207597EH4's long position.| 00108WAF7 vs. AKITA Drilling | 00108WAF7 vs. GameStop Corp | 00108WAF7 vs. Contagious Gaming | 00108WAF7 vs. Awilco Drilling PLC |
| 207597EH4 vs. Direct Line Insurance | 207597EH4 vs. Assurant | 207597EH4 vs. Employers Holdings | 207597EH4 vs. QBE Insurance Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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