Correlation Between AEye and Flywire Corp

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

By analyzing existing cross correlation between AEye Inc and Flywire Corp, you can compare the effects of market volatilities on AEye and Flywire Corp 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 Flywire Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEye and Flywire Corp.

Diversification Opportunities for AEye and Flywire Corp

0.76

Correlation Coefficient

AEye  Flywire Corp

Poor diversification

The 3 months correlation between AEye and Flywire is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AEye Inc and Flywire Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flywire Corp 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 Flywire Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flywire Corp has no effect on the direction of AEye i.e., AEye and Flywire Corp go up and down completely randomly.

Pair Corralation between AEye and Flywire Corp

Assuming the 90 days horizon AEye Inc is expected to generate 6.49 times more return on investment than Flywire Corp. However, AEye is 6.49 times more volatile than Flywire Corp. It trades about 0.11 of its potential returns per unit of risk. Flywire Corp is currently generating about 0.14 per unit of risk. If you would invest  0.90  in AEye Inc on September 1, 2024 and sell it today you would earn a total of  0.30  from holding AEye Inc or generate 33.33% return on investment over 90 days.

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

AEye Inc  vs.  Flywire Corp

AEye Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEye Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AEye showed solid returns over the last few months and may actually be approaching a breakup point.

Flywire Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flywire Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Flywire Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEye and Flywire Corp

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

The idea behind AEye Inc and Flywire Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.