Correlation Between Aeye and Marketing Worldwide

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

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

Diversification Opportunities for Aeye and Marketing Worldwide

0.01

Correlation Coefficient

Aeye  Marketing Worldwide

Significant diversification

The 3 months correlation between Aeye and Marketing is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Marketing Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marketing Worldwide and Aeye 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 Aeye Inc are associated (or correlated) with Marketing Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marketing Worldwide has no effect on the direction of Aeye i.e., Aeye and Marketing Worldwide go up and down completely randomly.

Pair Corralation between Aeye and Marketing Worldwide

Given the investment horizon of 90 days Aeye is expected to generate 1326.66 times less return on investment than Marketing Worldwide. But when comparing it to its historical volatility, Aeye Inc is 10.76 times less risky than Marketing Worldwide. It trades about 0.0 of its potential returns per unit of risk. Marketing Worldwide is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Marketing Worldwide on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Marketing Worldwide or generate 0.0% return on investment over 90 days.

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

Aeye Inc  vs.  Marketing Worldwide

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Marketing Worldwide

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marketing Worldwide are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Marketing Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeye and Marketing Worldwide

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

The idea behind Aeye Inc and Marketing Worldwide 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.