Correlation Between Aspen Aerogels and Americas Car

Can any of the company-specific risk be diversified away by investing in both Aspen Aerogels and Americas Car 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 Aspen Aerogels and Americas Car into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aspen Aerogels and Americas Car Mart, you can compare the effects of market volatilities on Aspen Aerogels and Americas Car 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 Aspen Aerogels with a short position of Americas Car. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Aerogels and Americas Car.

Diversification Opportunities for Aspen Aerogels and Americas Car

0.1

Correlation Coefficient

Aspen Aerogels  Americas Car

Average diversification

The 3 months correlation between Aspen and Americas is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Aerogels and Americas Car Mart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americas Car Mart and Aspen Aerogels 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 Aspen Aerogels are associated (or correlated) with Americas Car. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americas Car Mart has no effect on the direction of Aspen Aerogels i.e., Aspen Aerogels and Americas Car go up and down completely randomly.

Pair Corralation between Aspen Aerogels and Americas Car

Given the investment horizon of 90 days Aspen Aerogels is expected to generate 1.32 times more return on investment than Americas Car. However, Aspen Aerogels is 1.32 times more volatile than Americas Car Mart. It trades about 0.1 of its potential returns per unit of risk. Americas Car Mart is currently generating about -0.01 per unit of risk. If you would invest  567.00  in Aspen Aerogels on January 20, 2024 and sell it today you would earn a total of  915.00  from holding Aspen Aerogels or generate 161.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aspen Aerogels  vs.  Americas Car Mart

Aspen Aerogels

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Aerogels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aspen Aerogels displayed solid returns over the last few months and may actually be approaching a breakup point.

Americas Car Mart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Americas Car Mart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Aspen Aerogels and Americas Car

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

The idea behind Aspen Aerogels and Americas Car Mart 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.