Correlation Between Yearnfinance and AE

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

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

Diversification Opportunities for Yearnfinance and AE

0.84

Correlation Coefficient

Yearnfinance  AE

Very poor diversification

The 3 months correlation between Yearnfinance and AE is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding yearnfinance and AE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AE and Yearnfinance 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 yearnfinance are associated (or correlated) with AE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AE has no effect on the direction of Yearnfinance i.e., Yearnfinance and AE go up and down completely randomly.

Pair Corralation between Yearnfinance and AE

Assuming the 90 days trading horizon yearnfinance is expected to generate 0.58 times more return on investment than AE. However, yearnfinance is 1.72 times less risky than AE. It trades about 0.21 of its potential returns per unit of risk. AE is currently generating about 0.1 per unit of risk. If you would invest  486,585  in yearnfinance on September 2, 2024 and sell it today you would earn a total of  319,603  from holding yearnfinance or generate 65.68% return on investment over 90 days.

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

yearnfinance  vs.  AE

yearnfinance

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in yearnfinance are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Yearnfinance exhibited solid returns over the last few months and may actually be approaching a breakup point.

AE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, AE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yearnfinance and AE

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

The idea behind yearnfinance and AE 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.