Correlation Between Freedom Bank and Aeon Ventures

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

By analyzing existing cross correlation between Freedom Bank of and Aeon Ventures, you can compare the effects of market volatilities on Freedom Bank and Aeon Ventures 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 Freedom Bank with a short position of Aeon Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Aeon Ventures.

Diversification Opportunities for Freedom Bank and Aeon Ventures

-0.17

Correlation Coefficient

Freedom Bank  Aeon Ventures

Good diversification

The 3 months correlation between Freedom and Aeon is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Aeon Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Ventures and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Aeon Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Ventures has no effect on the direction of Freedom Bank i.e., Freedom Bank and Aeon Ventures go up and down completely randomly.

Pair Corralation between Freedom Bank and Aeon Ventures

Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Aeon Ventures. But the otc stock apears to be less risky and, when comparing its historical volatility, Freedom Bank of is 22.01 times less risky than Aeon Ventures. The otc stock trades about -0.05 of its potential returns per unit of risk. The Aeon Ventures is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.25  in Aeon Ventures on September 14, 2024 and sell it today you would lose (3.25) from holding Aeon Ventures or give up 76.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.65%
Values	Daily Returns

Freedom Bank of  vs.  Aeon Ventures

Freedom Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Bank of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Freedom Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aeon Ventures

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aeon Ventures are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Aeon Ventures sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freedom Bank and Aeon Ventures

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

The idea behind Freedom Bank of and Aeon Ventures 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 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..