Correlation Between 210518DN3 and 00108WAF7
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By analyzing existing cross correlation between CMS 265 15 AUG 52 and AEP TEX INC, you can compare the effects of market volatilities on 210518DN3 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 210518DN3 with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of 210518DN3 and 00108WAF7.
Diversification Opportunities for 210518DN3 and 00108WAF7
Good diversification
The 3 months correlation between 210518DN3 and 00108WAF7 is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CMS 265 15 AUG 52 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 210518DN3 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 CMS 265 15 AUG 52 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 210518DN3 i.e., 210518DN3 and 00108WAF7 go up and down completely randomly.
Pair Corralation between 210518DN3 and 00108WAF7
Assuming the 90 days trading horizon 210518DN3 is expected to generate 4.37 times less return on investment than 00108WAF7. But when comparing it to its historical volatility, CMS 265 15 AUG 52 is 1.81 times less risky than 00108WAF7. It trades about 0.04 of its potential returns per unit of risk. AEP TEX INC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,424 in AEP TEX INC on September 12, 2024 and sell it today you would earn a total of 244.00 from holding AEP TEX INC or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.57% |
| Values | Daily Returns |
CMS 265 15 AUG 52 vs. AEP TEX INC
Performance |
| Timeline |
| CMS 265 15 |
| AEP TEX INC |
210518DN3 and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 210518DN3 and 00108WAF7
The main advantage of trading using opposite 210518DN3 and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 210518DN3 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.| 210518DN3 vs. AEP TEX INC | 210518DN3 vs. US BANK NATIONAL | 210518DN3 vs. Alphabet Inc Class C | 210518DN3 vs. InMode |
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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