Correlation Between Archer Aviation and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Archer Aviation and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Aviation and Dow Jones Industrial, you can compare the effects of market volatilities on Archer Aviation and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Aviation and Dow Jones.
Diversification Opportunities for Archer Aviation and Dow Jones
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Archer and Dow is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Archer Aviation i.e., Archer Aviation and Dow Jones go up and down completely randomly.
Pair Corralation between Archer Aviation and Dow Jones
Given the investment horizon of 90 days Archer Aviation is expected to generate 7.66 times more return on investment than Dow Jones. However, Archer Aviation is 7.66 times more volatile than Dow Jones Industrial. It trades about 0.23 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.18 per unit of risk. If you would invest 356.00 in Archer Aviation on August 28, 2024 and sell it today you would earn a total of 392.00 from holding Archer Aviation or generate 110.11% 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. Dow Jones Industrial
Performance |
| Timeline |
Archer Aviation and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Archer Aviation
Pair trading matchups for Archer Aviation
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Archer Aviation and Dow Jones
The main advantage of trading using opposite Archer Aviation and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Aviation position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Archer Aviation vs. Vertical Aerospace | Archer Aviation vs. Ehang Holdings | Archer Aviation vs. Rocket Lab USA | Archer Aviation vs. Lilium NV |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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