Correlation Between 00108WAF7 and 458140CA6

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and 458140CA6 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 458140CA6 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 INTC 415 05 AUG 32, you can compare the effects of market volatilities on 00108WAF7 and 458140CA6 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 458140CA6. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and 458140CA6.

Diversification Opportunities for 00108WAF7 and 458140CA6

0.08

Correlation Coefficient

00108WAF7  458140CA6

Significant diversification

The 3 months correlation between 00108WAF7 and 458140CA6 is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and INTC 415 05 AUG 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTC 415 05 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 458140CA6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTC 415 05 has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and 458140CA6 go up and down completely randomly.

Pair Corralation between 00108WAF7 and 458140CA6

Assuming the 90 days trading horizon 00108WAF7 is expected to generate 1.16 times less return on investment than 458140CA6. In addition to that, 00108WAF7 is 3.53 times more volatile than INTC 415 05 AUG 32. It trades about 0.04 of its total potential returns per unit of risk. INTC 415 05 AUG 32 is currently generating about 0.15 per unit of volatility. If you would invest  9,280  in INTC 415 05 AUG 32 on October 9, 2024 and sell it today you would earn a total of  376.00  from holding INTC 415 05 AUG 32 or generate 4.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.0%
Values	Daily Returns

AEP TEX INC  vs.  INTC 415 05 AUG 32

AEP TEX INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 00108WAF7 sustained solid returns over the last few months and may actually be approaching a breakup point.

INTC 415 05

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTC 415 05 AUG 32 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 458140CA6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 00108WAF7 and 458140CA6

The main advantage of trading using opposite 00108WAF7 and 458140CA6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, 458140CA6 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 458140CA6 will offset losses from the drop in 458140CA6's long position.

The idea behind AEP TEX INC and INTC 415 05 AUG 32 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.