Correlation Between XAAR PLC and AECOM TECHNOLOGY

Can any of the company-specific risk be diversified away by investing in both XAAR PLC and AECOM TECHNOLOGY 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 XAAR PLC and AECOM TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between XAAR PLC LS 10 and AECOM TECHNOLOGY, you can compare the effects of market volatilities on XAAR PLC and AECOM TECHNOLOGY 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 XAAR PLC with a short position of AECOM TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of XAAR PLC and AECOM TECHNOLOGY.

Diversification Opportunities for XAAR PLC and AECOM TECHNOLOGY

0.0

Correlation Coefficient

XAAR PLC  AECOM TECHNOLOGY

Pay attention - limited upside

The 3 months correlation between XAAR and AECOM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding XAAR PLC LS 10 and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY and XAAR PLC 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 XAAR PLC LS 10 are associated (or correlated) with AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of XAAR PLC i.e., XAAR PLC and AECOM TECHNOLOGY go up and down completely randomly.

Pair Corralation between XAAR PLC and AECOM TECHNOLOGY

If you would invest  9,875  in AECOM TECHNOLOGY on October 21, 2024 and sell it today you would earn a total of  525.00  from holding AECOM TECHNOLOGY or generate 5.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

XAAR PLC LS 10  vs.  AECOM TECHNOLOGY

XAAR PLC LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XAAR PLC LS 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, XAAR PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AECOM TECHNOLOGY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AECOM TECHNOLOGY is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with XAAR PLC and AECOM TECHNOLOGY

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

The idea behind XAAR PLC LS 10 and AECOM TECHNOLOGY 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.