Correlation Between Technology Select and AOT Growth
Can any of the company-specific risk be diversified away by investing in both Technology Select and AOT Growth at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Technology Select and AOT Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and AOT Growth and, you can compare the effects of market volatilities on Technology Select and AOT Growth 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 Technology Select with a short position of AOT Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and AOT Growth.
Diversification Opportunities for Technology Select and AOT Growth
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Technology and AOT is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and AOT Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOT Growth and Technology Select 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 Technology Select Sector are associated (or correlated) with AOT Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOT Growth has no effect on the direction of Technology Select i.e., Technology Select and AOT Growth go up and down completely randomly.
Pair Corralation between Technology Select and AOT Growth
Considering the 90-day investment horizon Technology Select is expected to generate 1.21 times less return on investment than AOT Growth. But when comparing it to its historical volatility, Technology Select Sector is 1.17 times less risky than AOT Growth. It trades about 0.1 of its potential returns per unit of risk. AOT Growth and is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,290 in AOT Growth and on August 30, 2024 and sell it today you would earn a total of 2,330 from holding AOT Growth and or generate 101.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technology Select Sector vs. AOT Growth and
Performance |
| Timeline |
| Technology Select Sector |
| AOT Growth |
Technology Select and AOT Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and AOT Growth
The main advantage of trading using opposite Technology Select and AOT Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, AOT Growth 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 AOT Growth will offset losses from the drop in AOT Growth's long position.| Technology Select vs. First Trust Exchange Traded | Technology Select vs. Ultimus Managers Trust | Technology Select vs. Horizon Kinetics Medical | Technology Select vs. Harbor Health Care |
| AOT Growth vs. Global X NASDAQ | AOT Growth vs. Invesco ESG NASDAQ | AOT Growth vs. ClearBridge Large Cap | AOT Growth vs. AdvisorShares Dorsey Wright |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |