Correlation Between 00108WAF7 and 26443CAA1

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and 26443CAA1 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 00108WAF7 and 26443CAA1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and DUKE UNIV HEALTH, you can compare the effects of market volatilities on 00108WAF7 and 26443CAA1 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 00108WAF7 with a short position of 26443CAA1. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and 26443CAA1.

Diversification Opportunities for 00108WAF7 and 26443CAA1

-0.09

Correlation Coefficient

00108WAF7  26443CAA1

Good diversification

The 3 months correlation between 00108WAF7 and 26443CAA1 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and DUKE UNIV HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE UNIV HEALTH and 00108WAF7 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 AEP TEX INC are associated (or correlated) with 26443CAA1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE UNIV HEALTH has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and 26443CAA1 go up and down completely randomly.

Pair Corralation between 00108WAF7 and 26443CAA1

Assuming the 90 days trading horizon 00108WAF7 is expected to generate 1.66 times less return on investment than 26443CAA1. But when comparing it to its historical volatility, AEP TEX INC is 1.02 times less risky than 26443CAA1. It trades about 0.03 of its potential returns per unit of risk. DUKE UNIV HEALTH is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,796  in DUKE UNIV HEALTH on December 29, 2024 and sell it today you would earn a total of  167.00  from holding DUKE UNIV HEALTH or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	58.0%
Values	Daily Returns

AEP TEX INC  vs.  DUKE UNIV HEALTH

AEP TEX INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

DUKE UNIV HEALTH

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE UNIV HEALTH are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 26443CAA1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 00108WAF7 and 26443CAA1

The main advantage of trading using opposite 00108WAF7 and 26443CAA1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, 26443CAA1 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 26443CAA1 will offset losses from the drop in 26443CAA1's long position.

The idea behind AEP TEX INC and DUKE UNIV HEALTH 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.