Correlation Between Viridian Therapeutics and AES Corp

Can any of the company-specific risk be diversified away by investing in both Viridian Therapeutics and AES Corp 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 Viridian Therapeutics and AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Viridian Therapeutics and AES Corp, you can compare the effects of market volatilities on Viridian Therapeutics and AES Corp 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 Viridian Therapeutics with a short position of AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viridian Therapeutics and AES Corp.

Diversification Opportunities for Viridian Therapeutics and AES Corp

0.08

Correlation Coefficient

Viridian Therapeutics  AES Corp

Significant diversification

The 3 months correlation between Viridian and AES is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Viridian Therapeutics and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp and Viridian Therapeutics 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 Viridian Therapeutics are associated (or correlated) with AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp has no effect on the direction of Viridian Therapeutics i.e., Viridian Therapeutics and AES Corp go up and down completely randomly.

Pair Corralation between Viridian Therapeutics and AES Corp

Assuming the 90 days trading horizon Viridian Therapeutics is expected to under-perform the AES Corp. In addition to that, Viridian Therapeutics is 1.22 times more volatile than AES Corp. It trades about -0.12 of its total potential returns per unit of risk. AES Corp is currently generating about 0.02 per unit of volatility. If you would invest  1,237  in AES Corp on December 28, 2024 and sell it today you would earn a total of  5.00  from holding AES Corp or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Viridian Therapeutics  vs.  AES Corp

Viridian Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viridian Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AES Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AES Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AES Corp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Viridian Therapeutics and AES Corp

The main advantage of trading using opposite Viridian Therapeutics and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viridian Therapeutics position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.

The idea behind Viridian Therapeutics and AES Corp 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.