Correlation Between Greenbrier Companies and AER Energy

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

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

Diversification Opportunities for Greenbrier Companies and AER Energy

0.48

Correlation Coefficient

Greenbrier Companies  AER Energy

Very weak diversification

The 3 months correlation between Greenbrier and AER is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Greenbrier Companies and AER Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AER Energy Resources and Greenbrier Companies 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 Greenbrier Companies are associated (or correlated) with AER Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AER Energy Resources has no effect on the direction of Greenbrier Companies i.e., Greenbrier Companies and AER Energy go up and down completely randomly.

Pair Corralation between Greenbrier Companies and AER Energy

Considering the 90-day investment horizon Greenbrier Companies is expected to under-perform the AER Energy. But the stock apears to be less risky and, when comparing its historical volatility, Greenbrier Companies is 67.06 times less risky than AER Energy. The stock trades about -0.19 of its potential returns per unit of risk. The AER Energy Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.01  in AER Energy Resources on December 3, 2024 and sell it today you would lose (0.01) from holding AER Energy Resources or give up 90.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Greenbrier Companies  vs.  AER Energy Resources

Greenbrier Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenbrier Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AER Energy Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AER Energy Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, AER Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greenbrier Companies and AER Energy

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

The idea behind Greenbrier Companies and AER Energy Resources 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.