Correlation Between 00108WAF7 and NOVANT

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and NOVANT 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 NOVANT 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 NOVANT 2637 01 NOV 36, you can compare the effects of market volatilities on 00108WAF7 and NOVANT 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 NOVANT. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and NOVANT.

Diversification Opportunities for 00108WAF7 and NOVANT

-0.05

Correlation Coefficient

00108WAF7  NOVANT

Good diversification

The 3 months correlation between 00108WAF7 and NOVANT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and NOVANT 2637 01 NOV 36 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVANT 2637 01 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 NOVANT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVANT 2637 01 has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and NOVANT go up and down completely randomly.

Pair Corralation between 00108WAF7 and NOVANT

Assuming the 90 days trading horizon AEP TEX INC is expected to generate 0.8 times more return on investment than NOVANT. However, AEP TEX INC is 1.25 times less risky than NOVANT. It trades about -0.01 of its potential returns per unit of risk. NOVANT 2637 01 NOV 36 is currently generating about -0.05 per unit of risk. If you would invest  7,604  in AEP TEX INC on December 3, 2024 and sell it today you would lose (65.00) from holding AEP TEX INC or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.51%
Values	Daily Returns

AEP TEX INC  vs.  NOVANT 2637 01 NOV 36

AEP TEX INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEP TEX INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NOVANT 2637 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days NOVANT 2637 01 NOV 36 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NOVANT 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 NOVANT

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

The idea behind AEP TEX INC and NOVANT 2637 01 NOV 36 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.