Correlation Between 78442FDJ4 and 00108WAF7
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By analyzing existing cross correlation between US78442FDJ49 and AEP TEX INC, you can compare the effects of market volatilities on 78442FDJ4 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 78442FDJ4 with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of 78442FDJ4 and 00108WAF7.
Diversification Opportunities for 78442FDJ4 and 00108WAF7
Significant diversification
The 3 months correlation between 78442FDJ4 and 00108WAF7 is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding US78442FDJ49 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 78442FDJ4 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 US78442FDJ49 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 78442FDJ4 i.e., 78442FDJ4 and 00108WAF7 go up and down completely randomly.
Pair Corralation between 78442FDJ4 and 00108WAF7
Assuming the 90 days trading horizon US78442FDJ49 is expected to under-perform the 00108WAF7. But the bond apears to be less risky and, when comparing its historical volatility, US78442FDJ49 is 4.92 times less risky than 00108WAF7. The bond trades about -0.06 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 7,420 in AEP TEX INC on August 24, 2024 and sell it today you would earn a total of 801.00 from holding AEP TEX INC or generate 10.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 43.75% |
| Values | Daily Returns |
US78442FDJ49 vs. AEP TEX INC
Performance |
| Timeline |
| US78442FDJ49 |
| AEP TEX INC |
78442FDJ4 and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 78442FDJ4 and 00108WAF7
The main advantage of trading using opposite 78442FDJ4 and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 78442FDJ4 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.| 78442FDJ4 vs. AEP TEX INC | 78442FDJ4 vs. US BANK NATIONAL | 78442FDJ4 vs. 3M Company | 78442FDJ4 vs. Alcoa Corp |
| 00108WAF7 vs. Willamette Valley Vineyards | 00108WAF7 vs. National Beverage Corp | 00108WAF7 vs. Mesa Air Group | 00108WAF7 vs. Diageo PLC ADR |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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