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 |
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
Performance |
Timeline |
Greenbrier Companies |
AER Energy Resources |
Greenbrier Companies and AER Energy Volatility Contrast
Predicted Return Density |
Returns |
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.Greenbrier Companies vs. LB Foster | Greenbrier Companies vs. Freightcar America | Greenbrier Companies vs. Westinghouse Air Brake | Greenbrier Companies vs. CSX Corporation |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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