Correlation Between 26875PAP6 and 00108WAF7
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By analyzing existing cross correlation between EOG RES INC and AEP TEX INC, you can compare the effects of market volatilities on 26875PAP6 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 26875PAP6 with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26875PAP6 and 00108WAF7.
Diversification Opportunities for 26875PAP6 and 00108WAF7
Excellent diversification
The 3 months correlation between 26875PAP6 and 00108WAF7 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding EOG RES INC 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 26875PAP6 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 EOG RES INC 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 26875PAP6 i.e., 26875PAP6 and 00108WAF7 go up and down completely randomly.
Pair Corralation between 26875PAP6 and 00108WAF7
Assuming the 90 days trading horizon EOG RES INC is expected to under-perform the 00108WAF7. But the bond apears to be less risky and, when comparing its historical volatility, EOG RES INC is 8.11 times less risky than 00108WAF7. The bond trades about -0.05 of its potential returns per unit of risk. The AEP TEX INC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 7,270 in AEP TEX INC on November 29, 2024 and sell it today you would earn a total of 269.00 from holding AEP TEX INC or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
EOG RES INC vs. AEP TEX INC
Performance |
| Timeline |
| EOG RES INC |
| AEP TEX INC |
26875PAP6 and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 26875PAP6 and 00108WAF7
The main advantage of trading using opposite 26875PAP6 and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26875PAP6 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.The idea behind EOG RES INC and AEP TEX INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 00108WAF7 vs. Emerson Radio | 00108WAF7 vs. Acumen Pharmaceuticals | 00108WAF7 vs. Spyre Therapeutics | 00108WAF7 vs. Thor Industries |
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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