Correlation Between Archer Aviation and AAR Corp
Can any of the company-specific risk be diversified away by investing in both Archer Aviation and AAR 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 Archer Aviation and AAR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Aviation and AAR Corp, you can compare the effects of market volatilities on Archer Aviation and AAR 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 Archer Aviation with a short position of AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Aviation and AAR Corp.
Diversification Opportunities for Archer Aviation and AAR Corp
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Archer and AAR is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp and Archer Aviation 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 Archer Aviation are associated (or correlated) with AAR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAR Corp has no effect on the direction of Archer Aviation i.e., Archer Aviation and AAR Corp go up and down completely randomly.
Pair Corralation between Archer Aviation and AAR Corp
Given the investment horizon of 90 days Archer Aviation is expected to generate 3.0 times more return on investment than AAR Corp. However, Archer Aviation is 3.0 times more volatile than AAR Corp. It trades about 0.67 of its potential returns per unit of risk. AAR Corp is currently generating about 0.3 per unit of risk. If you would invest 315.00 in Archer Aviation on September 1, 2024 and sell it today you would earn a total of 642.00 from holding Archer Aviation or generate 203.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archer Aviation vs. AAR Corp
Performance |
| Timeline |
| Archer Aviation |
| AAR Corp |
Archer Aviation and AAR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer Aviation and AAR Corp
The main advantage of trading using opposite Archer Aviation and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Aviation position performs unexpectedly, AAR 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 AAR Corp will offset losses from the drop in AAR Corp's long position.| Archer Aviation vs. Vertical Aerospace | Archer Aviation vs. Ehang Holdings | Archer Aviation vs. Rocket Lab USA | Archer Aviation vs. Lilium NV |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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