Correlation Between UNITED and 00108WAF7
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By analyzing existing cross correlation between UNITED TECHNOLOGIES P and AEP TEX INC, you can compare the effects of market volatilities on UNITED 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 UNITED with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED and 00108WAF7.
Diversification Opportunities for UNITED and 00108WAF7
Significant diversification
The 3 months correlation between UNITED and 00108WAF7 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding UNITED TECHNOLOGIES P 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 UNITED 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 UNITED TECHNOLOGIES P 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 UNITED i.e., UNITED and 00108WAF7 go up and down completely randomly.
Pair Corralation between UNITED and 00108WAF7
Assuming the 90 days trading horizon UNITED is expected to generate 4.01 times less return on investment than 00108WAF7. But when comparing it to its historical volatility, UNITED TECHNOLOGIES P is 1.99 times less risky than 00108WAF7. It trades about 0.06 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 7,765 in AEP TEX INC on September 2, 2024 and sell it today you would lose (97.00) from holding AEP TEX INC or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 74.94% |
| Values | Daily Returns |
UNITED TECHNOLOGIES P vs. AEP TEX INC
Performance |
| Timeline |
| UNITED TECHNOLOGIES |
| AEP TEX INC |
UNITED and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED and 00108WAF7
The main advantage of trading using opposite UNITED and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED 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 UNITED TECHNOLOGIES P 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. Zhihu Inc ADR | 00108WAF7 vs. Playtika Holding Corp | 00108WAF7 vs. Thor Industries | 00108WAF7 vs. Dana Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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