Correlation Between AES Corp and AES

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

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

Diversification Opportunities for AES Corp and AES

0.0

Correlation Coefficient

AES Corp  AES

Pay attention - limited upside

The 3 months correlation between AES and AES is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp Unit and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and AES Corp 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 AES Corp Unit are associated (or correlated) with AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of AES Corp i.e., AES Corp and AES go up and down completely randomly.

Pair Corralation between AES Corp and AES

If you would invest  1,264  in The AES on December 26, 2024 and sell it today you would earn a total of  2.00  from holding The AES or generate 0.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AES Corp Unit  vs.  The AES

AES Corp Unit

Risk-Adjusted Performance

Very Weak

Over the last 90 days AES Corp Unit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AES Corp is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

AES

Risk-Adjusted Performance

Weak

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

Pair Trading with AES Corp and AES

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

The idea behind AES Corp Unit and The AES 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.