Correlation Between 540424AT5 and 00108WAF7
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By analyzing existing cross correlation between US540424AT59 and AEP TEX INC, you can compare the effects of market volatilities on 540424AT5 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 540424AT5 with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of 540424AT5 and 00108WAF7.
Diversification Opportunities for 540424AT5 and 00108WAF7
Average diversification
The 3 months correlation between 540424AT5 and 00108WAF7 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding US540424AT59 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 540424AT5 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 US540424AT59 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 540424AT5 i.e., 540424AT5 and 00108WAF7 go up and down completely randomly.
Pair Corralation between 540424AT5 and 00108WAF7
Assuming the 90 days trading horizon 540424AT5 is expected to generate 2333.74 times less return on investment than 00108WAF7. But when comparing it to its historical volatility, US540424AT59 is 130.61 times less risky than 00108WAF7. It trades about 0.01 of its potential returns per unit of risk. AEP TEX INC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,682 in AEP TEX INC on August 26, 2024 and sell it today you would lose (593.00) from holding AEP TEX INC or give up 7.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 78.05% |
| Values | Daily Returns |
US540424AT59 vs. AEP TEX INC
Performance |
| Timeline |
| US540424AT59 |
| AEP TEX INC |
540424AT5 and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 540424AT5 and 00108WAF7
The main advantage of trading using opposite 540424AT5 and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 540424AT5 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.| 540424AT5 vs. AEP TEX INC | 540424AT5 vs. US BANK NATIONAL | 540424AT5 vs. 3M Company | 540424AT5 vs. Alcoa Corp |
| 00108WAF7 vs. Mannatech Incorporated | 00108WAF7 vs. Postal Realty Trust | 00108WAF7 vs. Skechers USA | 00108WAF7 vs. Vera Bradley |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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