Correlation Between STCITY and 00108WAF7
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By analyzing existing cross correlation between STCITY 65 15 JAN 28 and AEP TEX INC, you can compare the effects of market volatilities on STCITY 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 STCITY with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of STCITY and 00108WAF7.
Diversification Opportunities for STCITY and 00108WAF7
Good diversification
The 3 months correlation between STCITY and 00108WAF7 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding STCITY 65 15 JAN 28 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 STCITY 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 STCITY 65 15 JAN 28 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 STCITY i.e., STCITY and 00108WAF7 go up and down completely randomly.
Pair Corralation between STCITY and 00108WAF7
Assuming the 90 days trading horizon STCITY 65 15 JAN 28 is expected to under-perform the 00108WAF7. In addition to that, STCITY is 1.06 times more volatile than AEP TEX INC. It trades about -0.37 of its total potential returns per unit of risk. AEP TEX INC is currently generating about 0.09 per unit of volatility. 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 |
STCITY 65 15 JAN 28 vs. AEP TEX INC
Performance |
| Timeline |
| STCITY 65 15 |
| AEP TEX INC |
STCITY and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STCITY and 00108WAF7
The main advantage of trading using opposite STCITY and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STCITY 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 STCITY 65 15 JAN 28 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.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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