Correlation Between Henry Schein and AES

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Can any of the company-specific risk be diversified away by investing in both Henry Schein and AES 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 Henry Schein and AES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henry Schein and The AES, you can compare the effects of market volatilities on Henry Schein and AES 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 Henry Schein with a short position of AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henry Schein and AES.

Diversification Opportunities for Henry Schein and AES

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Henry and AES is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Henry Schein and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and Henry Schein 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 Henry Schein are associated (or correlated) with AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Henry Schein i.e., Henry Schein and AES go up and down completely randomly.

Pair Corralation between Henry Schein and AES

Given the investment horizon of 90 days Henry Schein is expected to under-perform the AES. But the stock apears to be less risky and, when comparing its historical volatility, Henry Schein is 2.06 times less risky than AES. The stock trades about -0.05 of its potential returns per unit of risk. The The AES is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,388  in The AES on December 30, 2023 and sell it today you would earn a total of  144.00  from holding The AES or generate 10.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Henry Schein  vs.  The AES

 Performance 
       Timeline  
Henry Schein 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Henry Schein has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Henry Schein is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
AES 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days The AES 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.

Henry Schein and AES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Henry Schein and AES

The main advantage of trading using opposite Henry Schein and AES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henry Schein position performs unexpectedly, AES 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 AES will offset losses from the drop in AES's long position.
The idea behind Henry Schein and The AES 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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