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

0.47

Correlation Coefficient

Energy Services  Aecom Technology

Very weak diversification

The 3 months correlation between Energy and Aecom is 0.47. 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 3.56 times more volatile than Aecom Technology. It trades about -0.19 of its total potential returns per unit of risk. Aecom Technology is currently generating about -0.1 per unit of volatility. If you would invest  9,585  in Aecom Technology on January 25, 2024 and sell it today you would lose (197.00) from holding Aecom Technology or give up 2.06% 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

Energy Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Energy Services may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Aecom Technology

Risk-Adjusted Performance

6 of 100

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.

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.

The idea behind Energy Services 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.