Correlation Between PEOPLES LEASING and Aitken Spence

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

By analyzing existing cross correlation between PEOPLES LEASING FINANCE and Aitken Spence Hotel, you can compare the effects of market volatilities on PEOPLES LEASING and Aitken Spence 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 PEOPLES LEASING with a short position of Aitken Spence. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEOPLES LEASING and Aitken Spence.

Diversification Opportunities for PEOPLES LEASING and Aitken Spence

0.77

Correlation Coefficient

PEOPLES LEASING  Aitken Spence

Poor diversification

The 3 months correlation between PEOPLES and Aitken is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PEOPLES LEASING FINANCE and Aitken Spence Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aitken Spence Hotel and PEOPLES LEASING 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 PEOPLES LEASING FINANCE are associated (or correlated) with Aitken Spence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aitken Spence Hotel has no effect on the direction of PEOPLES LEASING i.e., PEOPLES LEASING and Aitken Spence go up and down completely randomly.

Pair Corralation between PEOPLES LEASING and Aitken Spence

Assuming the 90 days trading horizon PEOPLES LEASING FINANCE is expected to generate 0.8 times more return on investment than Aitken Spence. However, PEOPLES LEASING FINANCE is 1.24 times less risky than Aitken Spence. It trades about 0.32 of its potential returns per unit of risk. Aitken Spence Hotel is currently generating about 0.23 per unit of risk. If you would invest  1,090  in PEOPLES LEASING FINANCE on September 14, 2024 and sell it today you would earn a total of  380.00  from holding PEOPLES LEASING FINANCE or generate 34.86% return on investment over 90 days.

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

PEOPLES LEASING FINANCE  vs.  Aitken Spence Hotel

PEOPLES LEASING FINANCE

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PEOPLES LEASING FINANCE are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PEOPLES LEASING sustained solid returns over the last few months and may actually be approaching a breakup point.

Aitken Spence Hotel

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aitken Spence Hotel are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aitken Spence sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PEOPLES LEASING and Aitken Spence

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

The idea behind PEOPLES LEASING FINANCE and Aitken Spence Hotel 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.