Correlation Between Aega ASA and Target
Can any of the company-specific risk be diversified away by investing in both Aega ASA and Target 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 Aega ASA and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aega ASA and Target, you can compare the effects of market volatilities on Aega ASA and Target 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 Aega ASA with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aega ASA and Target.
Diversification Opportunities for Aega ASA and Target
Pay attention - limited upside
The 3 months correlation between Aega and Target is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aega ASA and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Aega ASA 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 Aega ASA are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Aega ASA i.e., Aega ASA and Target go up and down completely randomly.
Pair Corralation between Aega ASA and Target
Assuming the 90 days trading horizon Aega ASA is expected to generate 2.86 times more return on investment than Target. However, Aega ASA is 2.86 times more volatile than Target. It trades about 0.01 of its potential returns per unit of risk. Target is currently generating about -0.14 per unit of risk. If you would invest 200.00 in Aega ASA on January 24, 2024 and sell it today you would lose (1.00) from holding Aega ASA or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Aega ASA vs. Target
Performance |
| Timeline |
| Aega ASA |
| Target |
Aega ASA and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aega ASA and Target
The main advantage of trading using opposite Aega ASA and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aega ASA position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Aega ASA vs. Sparebank 1 SMN | Aega ASA vs. Grong Sparebank | Aega ASA vs. Cloudberry Clean EnergyAs | Aega ASA vs. Thor Medical ASA |
| Target vs. Big Lots | Target vs. Aquagold International | Target vs. Thrivent High Yield | Target vs. Morningstar Unconstrained Allocation |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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