Correlation Between Aeon and Marks

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

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

Diversification Opportunities for Aeon and Marks

-0.19

Correlation Coefficient

Aeon  Marks

Good diversification

The 3 months correlation between Aeon and Marks is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Co and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer and Aeon 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 Aeon Co are associated (or correlated) with Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Aeon i.e., Aeon and Marks go up and down completely randomly.

Pair Corralation between Aeon and Marks

Assuming the 90 days trading horizon Aeon is expected to generate 7.15 times less return on investment than Marks. But when comparing it to its historical volatility, Aeon Co is 1.87 times less risky than Marks. It trades about 0.03 of its potential returns per unit of risk. Marks and Spencer is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Marks and Spencer on September 23, 2024 and sell it today you would earn a total of  327.00  from holding Marks and Spencer or generate 245.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aeon Co  vs.  Marks and Spencer

Aeon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeon Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Marks and Spencer

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marks and Spencer are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Marks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aeon and Marks

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

The idea behind Aeon Co and Marks and Spencer 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.