Correlation Between Aena SME and FactSet Research

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

By analyzing existing cross correlation between Aena SME SA and FactSet Research Systems, you can compare the effects of market volatilities on Aena SME and FactSet Research 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 Aena SME with a short position of FactSet Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SME and FactSet Research.

Diversification Opportunities for Aena SME and FactSet Research

-0.75

Correlation Coefficient

Aena SME  FactSet Research

Pay attention - limited upside

The 3 months correlation between Aena and FactSet is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aena SME SA and FactSet Research Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FactSet Research Systems and Aena SME 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 Aena SME SA are associated (or correlated) with FactSet Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FactSet Research Systems has no effect on the direction of Aena SME i.e., Aena SME and FactSet Research go up and down completely randomly.

Pair Corralation between Aena SME and FactSet Research

Assuming the 90 days horizon Aena SME SA is expected to generate 1.21 times more return on investment than FactSet Research. However, Aena SME is 1.21 times more volatile than FactSet Research Systems. It trades about 0.18 of its potential returns per unit of risk. FactSet Research Systems is currently generating about -0.1 per unit of risk. If you would invest  20,720  in Aena SME SA on December 28, 2024 and sell it today you would earn a total of  2,948  from holding Aena SME SA or generate 14.23% return on investment over 90 days.

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

Aena SME SA  vs.  FactSet Research Systems

Aena SME SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aena SME reported solid returns over the last few months and may actually be approaching a breakup point.

FactSet Research Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Aena SME and FactSet Research

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

The idea behind Aena SME SA and FactSet Research Systems 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.