Correlation Between 06406RAN7 and 00108WAF7
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By analyzing existing cross correlation between BANK OF NEW and AEP TEX INC, you can compare the effects of market volatilities on 06406RAN7 and 00108WAF7 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 06406RAN7 with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of 06406RAN7 and 00108WAF7.
Diversification Opportunities for 06406RAN7 and 00108WAF7
Good diversification
The 3 months correlation between 06406RAN7 and 00108WAF7 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF NEW and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC and 06406RAN7 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 BANK OF NEW are associated (or correlated) with 00108WAF7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of 06406RAN7 i.e., 06406RAN7 and 00108WAF7 go up and down completely randomly.
Pair Corralation between 06406RAN7 and 00108WAF7
Assuming the 90 days trading horizon BANK OF NEW is expected to generate 0.07 times more return on investment than 00108WAF7. However, BANK OF NEW is 14.54 times less risky than 00108WAF7. It trades about -0.17 of its potential returns per unit of risk. AEP TEX INC is currently generating about -0.04 per unit of risk. If you would invest 9,859 in BANK OF NEW on September 1, 2024 and sell it today you would lose (114.00) from holding BANK OF NEW or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.67% |
| Values | Daily Returns |
BANK OF NEW vs. AEP TEX INC
Performance |
| Timeline |
| BANK OF NEW |
| AEP TEX INC |
06406RAN7 and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 06406RAN7 and 00108WAF7
The main advantage of trading using opposite 06406RAN7 and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 06406RAN7 position performs unexpectedly, 00108WAF7 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 00108WAF7 will offset losses from the drop in 00108WAF7's long position.| 06406RAN7 vs. The9 Ltd ADR | 06406RAN7 vs. Dennys Corp | 06406RAN7 vs. Merit Medical Systems | 06406RAN7 vs. Alvotech |
| 00108WAF7 vs. AKITA Drilling | 00108WAF7 vs. GameStop Corp | 00108WAF7 vs. Contagious Gaming | 00108WAF7 vs. Awilco Drilling PLC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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