Correlation Between AECOM TECHNOLOGY and Packaging

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

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

Diversification Opportunities for AECOM TECHNOLOGY and Packaging

0.86

Correlation Coefficient

AECOM TECHNOLOGY  Packaging

Very poor diversification

The 3 months correlation between AECOM and Packaging is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and Packaging of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Packaging go up and down completely randomly.

Pair Corralation between AECOM TECHNOLOGY and Packaging

Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 1.04 times less return on investment than Packaging. In addition to that, AECOM TECHNOLOGY is 1.44 times more volatile than Packaging of. It trades about 0.1 of its total potential returns per unit of risk. Packaging of is currently generating about 0.15 per unit of volatility. If you would invest  20,711  in Packaging of on October 25, 2024 and sell it today you would earn a total of  2,289  from holding Packaging of or generate 11.05% return on investment over 90 days.

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

AECOM TECHNOLOGY  vs.  Packaging of

AECOM TECHNOLOGY

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, AECOM TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Packaging

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging of are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Packaging may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AECOM TECHNOLOGY and Packaging

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

The idea behind AECOM TECHNOLOGY and Packaging of 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.