Correlation Between Cadiz Depositary and AES
Can any of the company-specific risk be diversified away by investing in both Cadiz Depositary and AES 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 Cadiz Depositary and AES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadiz Depositary Shares and The AES, you can compare the effects of market volatilities on Cadiz Depositary and AES 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 Cadiz Depositary with a short position of AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and AES.
Diversification Opportunities for Cadiz Depositary and AES
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cadiz and AES is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and Cadiz Depositary 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 Cadiz Depositary Shares are associated (or correlated) with AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Cadiz Depositary i.e., Cadiz Depositary and AES go up and down completely randomly.
Pair Corralation between Cadiz Depositary and AES
Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 0.7 times more return on investment than AES. However, Cadiz Depositary Shares is 1.42 times less risky than AES. It trades about 0.6 of its potential returns per unit of risk. The AES is currently generating about -0.24 per unit of risk. If you would invest 1,268 in Cadiz Depositary Shares on March 17, 2024 and sell it today you would earn a total of 214.00 from holding Cadiz Depositary Shares or generate 16.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cadiz Depositary Shares vs. The AES
Performance |
Timeline |
Cadiz Depositary Shares |
AES |
Cadiz Depositary and AES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cadiz Depositary and AES
The main advantage of trading using opposite Cadiz Depositary and AES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz Depositary position performs unexpectedly, AES 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 AES will offset losses from the drop in AES's long position.Cadiz Depositary vs. Applied UV Preferred | Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. Chicken Soup for | Cadiz Depositary vs. LifeMD Preferred Series |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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