Correlation Between Watsco and Aeva Technologies,

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

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

Diversification Opportunities for Watsco and Aeva Technologies,

0.5

Correlation Coefficient

Watsco  Aeva Technologies,

Very weak diversification

The 3 months correlation between Watsco and Aeva is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Watsco Inc and Aeva Technologies, WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeva Technologies, and Watsco 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 Watsco Inc are associated (or correlated) with Aeva Technologies,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeva Technologies, has no effect on the direction of Watsco i.e., Watsco and Aeva Technologies, go up and down completely randomly.

Pair Corralation between Watsco and Aeva Technologies,

Considering the 90-day investment horizon Watsco Inc is expected to under-perform the Aeva Technologies,. But the stock apears to be less risky and, when comparing its historical volatility, Watsco Inc is 13.41 times less risky than Aeva Technologies,. The stock trades about -0.54 of its potential returns per unit of risk. The Aeva Technologies, WT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6.30  in Aeva Technologies, WT on September 25, 2024 and sell it today you would lose (0.05) from holding Aeva Technologies, WT or give up 0.79% of portfolio value over 90 days.

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

Watsco Inc  vs.  Aeva Technologies, WT

Watsco Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Watsco Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Watsco is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Aeva Technologies,

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Watsco and Aeva Technologies,

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

The idea behind Watsco Inc and Aeva Technologies, WT 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.