Correlation Between AECOM TECHNOLOGY and Shenandoah Telecommunicatio

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

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

Diversification Opportunities for AECOM TECHNOLOGY and Shenandoah Telecommunicatio

-0.05

Correlation Coefficient

AECOM TECHNOLOGY  Shenandoah Telecommunicatio

Good diversification

The 3 months correlation between AECOM and Shenandoah is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between AECOM TECHNOLOGY and Shenandoah Telecommunicatio

Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.48 times more return on investment than Shenandoah Telecommunicatio. However, AECOM TECHNOLOGY is 2.08 times less risky than Shenandoah Telecommunicatio. It trades about 0.05 of its potential returns per unit of risk. Shenandoah Telecommunications is currently generating about -0.01 per unit of risk. If you would invest  7,745  in AECOM TECHNOLOGY on October 10, 2024 and sell it today you would earn a total of  2,555  from holding AECOM TECHNOLOGY or generate 32.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

AECOM TECHNOLOGY  vs.  Shenandoah Telecommunications

AECOM TECHNOLOGY

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, AECOM TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Shenandoah Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AECOM TECHNOLOGY and Shenandoah Telecommunicatio

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

The idea behind AECOM TECHNOLOGY and Shenandoah Telecommunications 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.