Correlation Between AAON and Aecom Technology

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Can any of the company-specific risk be diversified away by investing in both AAON 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 AAON and Aecom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAON Inc and Aecom Technology, you can compare the effects of market volatilities on AAON 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 AAON with a short position of Aecom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAON and Aecom Technology.

Diversification Opportunities for AAON and Aecom Technology

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between AAON and Aecom is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology and AAON 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 AAON Inc 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 AAON i.e., AAON and Aecom Technology go up and down completely randomly.

Pair Corralation between AAON and Aecom Technology

Given the investment horizon of 90 days AAON is expected to generate 6.34 times less return on investment than Aecom Technology. In addition to that, AAON is 1.4 times more volatile than Aecom Technology. It trades about 0.04 of its total potential returns per unit of risk. Aecom Technology is currently generating about 0.34 per unit of volatility. If you would invest  8,940  in Aecom Technology on December 29, 2023 and sell it today you would earn a total of  791.00  from holding Aecom Technology or generate 8.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AAON Inc  vs.  Aecom Technology

 Performance 
       Timeline  
AAON Inc 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in AAON Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, AAON displayed solid returns over the last few months and may actually be approaching a breakup point.
Aecom Technology 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Aecom Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Aecom Technology is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

AAON and Aecom Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AAON and Aecom Technology

The main advantage of trading using opposite AAON and Aecom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAON 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 AAON Inc 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.
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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