Correlation Between Skyworks Solutions and AES
Can any of the company-specific risk be diversified away by investing in both Skyworks Solutions 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 Skyworks Solutions and AES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skyworks Solutions and The AES, you can compare the effects of market volatilities on Skyworks Solutions 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 Skyworks Solutions with a short position of AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skyworks Solutions and AES.
Diversification Opportunities for Skyworks Solutions and AES
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Skyworks and AES is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Skyworks Solutions and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and Skyworks Solutions 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 Skyworks Solutions 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 Skyworks Solutions i.e., Skyworks Solutions and AES go up and down completely randomly.
Pair Corralation between Skyworks Solutions and AES
Given the investment horizon of 90 days Skyworks Solutions is expected to under-perform the AES. But the stock apears to be less risky and, when comparing its historical volatility, Skyworks Solutions is 1.23 times less risky than AES. The stock trades about -0.06 of its potential returns per unit of risk. The The AES is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,473 in The AES on January 24, 2024 and sell it today you would earn a total of 63.00 from holding The AES or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Skyworks Solutions vs. The AES
Performance |
| Timeline |
| Skyworks Solutions |
| AES |
Skyworks Solutions and AES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skyworks Solutions and AES
The main advantage of trading using opposite Skyworks Solutions and AES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skyworks Solutions 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 Skyworks Solutions 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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