Correlation Between Anfield Capital and Aeye

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

By analyzing existing cross correlation between Anfield Capital Diversified and Aeye Inc, you can compare the effects of market volatilities on Anfield Capital and Aeye 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 Anfield Capital with a short position of Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anfield Capital and Aeye.

Diversification Opportunities for Anfield Capital and Aeye

-0.14

Correlation Coefficient

Anfield Capital  Aeye

Good diversification

The 3 months correlation between Anfield and Aeye is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Anfield Capital Diversified and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc and Anfield Capital 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 Anfield Capital Diversified are associated (or correlated) with Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Anfield Capital i.e., Anfield Capital and Aeye go up and down completely randomly.

Pair Corralation between Anfield Capital and Aeye

Given the investment horizon of 90 days Anfield Capital Diversified is expected to generate 0.08 times more return on investment than Aeye. However, Anfield Capital Diversified is 13.27 times less risky than Aeye. It trades about 0.03 of its potential returns per unit of risk. Aeye Inc is currently generating about -0.36 per unit of risk. If you would invest  888.00  in Anfield Capital Diversified on January 25, 2024 and sell it today you would earn a total of  2.00  from holding Anfield Capital Diversified or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Anfield Capital Diversified  vs.  Aeye Inc

Anfield Capital Dive

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anfield Capital Diversified are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Anfield Capital is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Aeye Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeye Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Aeye is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Anfield Capital and Aeye

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

The idea behind Anfield Capital Diversified and Aeye Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.