Correlation Between Energy Services and Aecom Technology
Can any of the company-specific risk be diversified away by investing in both Energy Services 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 Energy Services and Aecom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services and Aecom Technology, you can compare the effects of market volatilities on Energy Services 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 Energy Services with a short position of Aecom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Aecom Technology.
Diversification Opportunities for Energy Services and Aecom Technology
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Aecom is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology and Energy Services 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 Energy Services 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 Energy Services i.e., Energy Services and Aecom Technology go up and down completely randomly.
Pair Corralation between Energy Services and Aecom Technology
Given the investment horizon of 90 days Energy Services is expected to under-perform the Aecom Technology. In addition to that, Energy Services is 2.86 times more volatile than Aecom Technology. It trades about -0.14 of its total potential returns per unit of risk. Aecom Technology is currently generating about -0.09 per unit of volatility. If you would invest 9,561 in Aecom Technology on January 20, 2024 and sell it today you would lose (237.00) from holding Aecom Technology or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services vs. Aecom Technology
Performance |
| Timeline |
| Energy Services |
| Aecom Technology |
Energy Services and Aecom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Aecom Technology
The main advantage of trading using opposite Energy Services and Aecom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services 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.| Energy Services vs. EMCOR Group | Energy Services vs. Comfort Systems USA | Energy Services vs. Primoris Services | Energy Services vs. Granite Construction Incorporated |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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