Correlation Between Aitken Spence and PEOPLES LEASING

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

By analyzing existing cross correlation between Aitken Spence Hotel and PEOPLES LEASING FINANCE, you can compare the effects of market volatilities on Aitken Spence and PEOPLES LEASING 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 Aitken Spence with a short position of PEOPLES LEASING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aitken Spence and PEOPLES LEASING.

Diversification Opportunities for Aitken Spence and PEOPLES LEASING

0.77

Correlation Coefficient

Aitken Spence  PEOPLES LEASING

Poor diversification

The 3 months correlation between Aitken and PEOPLES is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aitken Spence Hotel and PEOPLES LEASING FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEOPLES LEASING FINANCE and Aitken Spence 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 Aitken Spence Hotel are associated (or correlated) with PEOPLES LEASING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEOPLES LEASING FINANCE has no effect on the direction of Aitken Spence i.e., Aitken Spence and PEOPLES LEASING go up and down completely randomly.

Pair Corralation between Aitken Spence and PEOPLES LEASING

Assuming the 90 days trading horizon Aitken Spence is expected to generate 1.13 times less return on investment than PEOPLES LEASING. In addition to that, Aitken Spence is 1.24 times more volatile than PEOPLES LEASING FINANCE. It trades about 0.23 of its total potential returns per unit of risk. PEOPLES LEASING FINANCE is currently generating about 0.32 per unit of volatility. If you would invest  1,090  in PEOPLES LEASING FINANCE on September 14, 2024 and sell it today you would earn a total of  380.00  from holding PEOPLES LEASING FINANCE or generate 34.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aitken Spence Hotel  vs.  PEOPLES LEASING FINANCE

Aitken Spence Hotel

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aitken Spence Hotel are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aitken Spence sustained solid returns over the last few months and may actually be approaching a breakup point.

PEOPLES LEASING FINANCE

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PEOPLES LEASING FINANCE are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PEOPLES LEASING sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aitken Spence and PEOPLES LEASING

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

The idea behind Aitken Spence Hotel and PEOPLES LEASING FINANCE 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.