Correlation Between Aeris Indstria and Lowes Companies

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

By analyzing existing cross correlation between Aeris Indstria e and Lowes Companies, you can compare the effects of market volatilities on Aeris Indstria and Lowes Companies 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 Aeris Indstria with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeris Indstria and Lowes Companies.

Diversification Opportunities for Aeris Indstria and Lowes Companies

-0.13

Correlation Coefficient

Aeris Indstria  Lowes Companies

Good diversification

The 3 months correlation between Aeris and Lowes is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aeris Indstria e and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Aeris Indstria 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 Aeris Indstria e are associated (or correlated) with Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Aeris Indstria i.e., Aeris Indstria and Lowes Companies go up and down completely randomly.

Pair Corralation between Aeris Indstria and Lowes Companies

Assuming the 90 days trading horizon Aeris Indstria e is expected to generate 9.52 times more return on investment than Lowes Companies. However, Aeris Indstria is 9.52 times more volatile than Lowes Companies. It trades about 0.17 of its potential returns per unit of risk. Lowes Companies is currently generating about -0.14 per unit of risk. If you would invest  564.00  in Aeris Indstria e on September 27, 2024 and sell it today you would earn a total of  268.00  from holding Aeris Indstria e or generate 47.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Aeris Indstria e  vs.  Lowes Companies

Aeris Indstria e

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aeris Indstria e are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Aeris Indstria unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lowes Companies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lowes Companies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lowes Companies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aeris Indstria and Lowes Companies

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

The idea behind Aeris Indstria e and Lowes Companies 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.