Correlation Between 00108WAF7 and 42225UAF1
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By analyzing existing cross correlation between AEP TEX INC and HEALTHCARE TR AMER, you can compare the effects of market volatilities on 00108WAF7 and 42225UAF1 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 42225UAF1. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and 42225UAF1.
Diversification Opportunities for 00108WAF7 and 42225UAF1
Good diversification
The 3 months correlation between 00108WAF7 and 42225UAF1 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and HEALTHCARE TR AMER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHCARE TR AMER 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 42225UAF1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHCARE TR AMER has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and 42225UAF1 go up and down completely randomly.
Pair Corralation between 00108WAF7 and 42225UAF1
Assuming the 90 days trading horizon AEP TEX INC is expected to generate 221.53 times more return on investment than 42225UAF1. However, 00108WAF7 is 221.53 times more volatile than HEALTHCARE TR AMER. It trades about 0.1 of its potential returns per unit of risk. HEALTHCARE TR AMER is currently generating about 0.0 per unit of risk. If you would invest 7,375 in AEP TEX INC on September 3, 2024 and sell it today you would earn a total of 846.00 from holding AEP TEX INC or generate 11.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEP TEX INC vs. HEALTHCARE TR AMER
Performance |
| Timeline |
| AEP TEX INC |
| HEALTHCARE TR AMER |
00108WAF7 and 42225UAF1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 00108WAF7 and 42225UAF1
The main advantage of trading using opposite 00108WAF7 and 42225UAF1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, 42225UAF1 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 42225UAF1 will offset losses from the drop in 42225UAF1's long position.| 00108WAF7 vs. Universal Music Group | 00108WAF7 vs. Pool Corporation | 00108WAF7 vs. Under Armour C | 00108WAF7 vs. Figs Inc |
| 42225UAF1 vs. AEP TEX INC | 42225UAF1 vs. US BANK NATIONAL | 42225UAF1 vs. Jackson Financial | 42225UAF1 vs. MetLife |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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